Andy talks to Marcus Cauchi about some wicked problems in sales.
If your team has some sales problems that need solving, contact Marcus - details below
ANDY RACIC
SUMMARY
What kind of guidance does Andy Racic offer to new salesmen just starting out in their careers?
Exercise self-control, work diligently, maintain attention to detail, and be distracted-free.
What level of technology is necessary for a sales organization to preserve personal connections with clients and prospects?
The basic minimum required for a sales organization to maintain human contacts with clients and prospects is a phone, spreadsheet, internet access, and email.
What guidance is given to salespeople regarding their qualification procedure?
The goal is to determine whether the individual on the phone knows they have a problem or is open to the dialogue about maybe having a problem. The foundations of research and knowing the company based on the ideal customer profile are key. The emphasis should be on determining whether the salesperson can help and if they are the suitable people to help, followed by jointly devising a solution with the prospect. Qualification metrics like BANT are not useful in this regard. Not only are transactional relationships desired, but also long-lasting ones.
What adjustments do you think need to be made to the way management manages and leadership leads in a sales environment?
One sentence summary of the response: Focusing on account and portfolio penetration inside accounts, customer lifetime value, customer satisfaction levels, and cutting back on unnecessary marketing activities may be more useful ways to gauge sales performance and success.
TRANSCRIPT
Marcus Cauchi: Hello and welcome back to The Inquisitor Podcast with me, Marcus Cauchi. Today I'm delighted to have the Head of Sales at Tango, Andy Racic as my guest. Andy, would you mind giving us a 60 to 90-second summary of your career so far?
Andy Racic: Absolutely. Hey Marcus, appreciate being here. Uh, Andy Racic, Head of the Sales at Tango, been with tango for two, two and a half years now. Been in sales total, just under a decade now. And I'm your, uh, I guess your, your stereotypical, accidentally-stumbled-into-sales kind of guy. Um, studied Physics of all things in, in university or college. And a couple years after graduating realized I had almost no passion for just the generic kind of analyst type work I was, I was doing.
And then, um, luckily had a, had a friend introduced me to the, the idea of the wondrous world of sales. And, uh, it's been a, it's been a very fun and interesting ride ever since. But for the most of my, my professional sales career been selling to and servicing HR and benefits professionals in, in some form or fashion.
What do you put scaling of your company down to?
Marcus Cauchi: You've gone through quite meteoric ride over eight years to be head of sales for a company that's scaling up as yours is what do you put that down to?
Andy Racic: A lot of hard work at a lot of luck.
I say it that way because I, I know what I've gone through and I, what I've put myself through to, to develop my skill set and to become a, a better and more, more capable and competent professional. But I look back to, you know, the various interviews I had, where I did get the job that I wanted, versus I, you know, very well could have been beaten out and whatnot.
And I know that in a lot of cases, it was just a, a little bit of luck, so to speak because there's good competition out there. And one way or another I've done my part, but I've also been, been very fortunate to get to the spot that I am. But mostly I've, I've really, really studied the game as, as best I can whenever I can.
Have you got mentors or coaches?
Marcus Cauchi: So, so have you got mentors? Coaches?
Andy Racic: No one officially or, or that I'm paying for, so to speak. I've been lucky that I'm just kind of naturally, I guess, good at collecting or creating mentors. Something I stumbled into relatively early on where I was just had the idea of asking people for help and, you know, maybe the way I asked or, or how I asked or whatever it was, they were more comfortable or willing to, to give me some of their time and advice.
So I've got, I've got a handful in my back pocket and, you know, lately that, that number's been growing a little bit, but knowing that I'm, I'm currently paying for, but I'm the more I think about it, the more I'm starting to get open to that idea too. Okay.
What's the best advice you've been given?
Marcus Cauchi: So tell me this, what, what's the best advice you've been given?
Andy Racic: Oh, man, so much advice. "It's not about you". That's, that's probably it. It's so easy to, you know, inject ourself into a situation or focus about, you know, what, what it is about us that made it something that did work or didn't work or whatever it is. And more often than not, we're, we're really just a, a catalyst, so to speak for some other process to happen for someone else.
We're background noise in someone else's life more often than not. So be helpful background noise, right?
Marcus Cauchi: Absolutely, I--, and I think that's a great piece of advice. The minute you put yourself between the prospect and their decision to buy, because you allow your ego to get in the way you wanna be the smartest person in the room, then you effectively kill the sale. And we, we forget too often that people buy for their reasons, not our reasons. And our job is to facilitate their decision.
What kind of advice are you sharing with young sales people that are right at the beginning of their career?
Marcus Cauchi: So tell me this in terms of what you are advising people. Cause I know that you're involved in things like the revenue collective and uh, various other groups. What kind of advice are you sharing with young sales people that are right at the beginning of their career?
Andy Racic: It's mostly a matter of, of, "Hey, be disciplined and diligent in your work and be focused with your time", cuz that's those are some of the things that regardless of your job, your skillset, where you're at and in your career, your development, any of us, and, and really all of us at, at any level can benefit from. It's something where especially the, the, you know, "Be focused with your time". It's so, so, so easy to get distracted at really any point throughout the day. I mean, pretty much all of us are running around with a device like this in our pocket that, you know, it, it's got a million ways to interrupt our day. On top of that, we've got email, Slack, it's millions of notifications and there's, there's just so many ways to just find yourself pulled away with busy work, with things that feel like they're helpful, useful, et cetera.
The job is right there in front of us, right? You know, just do the job, reach out to the right people with the right messages at the right times. But it's like, oh no, I just need to, you know, read about this magic bullet or read about this magic bullet or read about this magic bullet.
It's like, okay, well, "Hey, you've read about 50 magic bullets this week. Which one of them are you firing? Okay. How many times are you firing them? Which one of the, which of those are, are hitting things, right?".
Marcus Cauchi: Another great physicist cum salesperson, Dave Brock has done some research and he says that from his research, the average time in front of the customer is between 12% and 21%.
Now I've read some research a while back that suggests that the average salesperson is only highly productive, 25% to 35% of any given working day. Which means that the average salesperson is only highly productive and in front of the customer between 3% and 7.65% of any given working day. Now when you consider what that means, that is a shocking, shocking statistic. Because the majority of time is spent on distraction on looking busy, on shuffling bits of paper, doing research, looking at the data, instead of actually engaging with other human beings.
What is the minimum amount of technology available and still be able to maintain human relationships with their customers and their prospects?
Marcus Cauchi: And it's depressing because I think there are so many organizations out there that have been sucked into this game, this, um, arms race, um, that who can have the most data, who can play with the most tools in your experience. What, what is the minimum amount of technology that a good sales organization should have available to it, and still be able to maintain human relationships with their customers and their prospects?
Andy Racic: Oh, that's really bare bones, honestly, from the individual contributor level. I mean, you need a phone, you need some sort of spreadsheet and internet access. And that's honestly it, I mean, I've, I've developed a lot of business off of looking at people on LinkedIn with a free LinkedIn account, you know, identifying who I should be reaching out to and just systematically reaching out to them over a long enough time period.
And then, tadah that turns into a relationship eventually. I mean, obviously there's a lot of value to having a sophisticated CRMs that you can do reporting and then, you know, sales leadership can figure out, "Hey, where we should spend our time more effectively?" But I mean, you really don't need that much. And I'm, I'm not trying to take away from the entire world of sales enablement info tools, etc.
Cause yeah, you can definitely speed up a lot of processes and, get a lot of value outta that stuff. But to sit down and make money, you need a phone, you need a spreadsheet and you need internet access. That's about it. Email of course.
Marcus Cauchi: Excellent. Okay. So again, I, I have a real bee in my bonnet because I think we've been seduced and gone too far in the other direction and CRM, you know, the data in CRM, uh, based on the research that I've read only about 20% of it is of any real value. Um, which again is really depressing because told me to call back in two weeks is not a valuable input ring back in six months is not valuable input.
What is it that you're advising them to do in terms of their qualification process?
Marcus Cauchi: They were interested is not valuable input. So when you are working with sales people, what is it that you're advising them to do in terms of their qualification process? What should they be qualifying for?
Andy Racic: I mean, the basics you can, you can research, right? You can understand, you know, Based on your ideal customer profile is the organization of the right size.
Are they in the right industry where, where it makes sense for you to even call them from there. But once you're on the phone, I mean, you know, you need to understand, Hey, does this person recognize that they either have a problem or may have a problem? Or are they open to the I the, the conversation of, "Can you help me understand if I have a bigger problem than I realized?".
And that's, that's really all you need to get to at that point, because if, if you get to that, then it's like, okay, cool. They're gonna be willing to engage, uh, with us and spend some time who knows how much time and who knows if they're gonna spend any money, but they're willing to then, you know, go through a bit of a process to see whether or not we can potentially help them and whether or not they're open to that help.
I've seen, uh, you know, qualification metrics like BANTs you know, I'm just like, it makes sense from the, the sales leader point of view, right? Like, Hey, it'd be great to know all these things, but then you try and you try and reframe that and look at that in a, how do I ask this question to someone else that doesn't know me really at all?
Uh, or barely knows me. And how do I ha have them care about giving me a meaningful answer? And yeah, like maybe I do have a budget for this, but I don't necessarily want to tell you cuz that's, that's basically getting in into negotiation to an extent already. I don't want to have that conversation around do I have a budget or how big it is? And like maybe I just grossly don't understand BANT, but I just don't think there's much value in, in some of those qualification metrics.
Marcus Cauchi: My mantra is "BANT is bollocks." It's a selfish qualification process that brings no value to the prospect or the customer. And until you've bought value, you have no business, be faffing around asking those kind of questions you need to establish "Can you help?" If you can, "Are you the right people to help?" If you can say yes to both of those, then you have an obligation to dig deeper and establish, and co-develop a solution with your prospect. But I, I think one of my big frustrations with our profession is that it's massively transactional.
And what we should be looking at is how do we create relationships that last a lifetime. The whole idea that we should just be going out there going after our quota raises yet another important question.
Do you believe that compensation schemes drive the correct behavior as you've experienced them so far?
Marcus Cauchi: So I'm throwing you in right at the deep end, pulling the pin on the grenade on this one. Do you believe that compensation schemes drive the correct behavior as you've experienced them so far?
Andy Racic: No, not at all. I benefit benefited from some very nice comp plans and I've been less than happy with some other comp plans I've been a part of. But, and granted, you know, Hey, you know, up until a certain amount of money, whatever the, the number is depending on inflation and whatnot, like $75,000 or something.
The last time I checked up until a certain amount of money, there's like a one-to-one correlation between, you know, increase in happiness, call it that, and increase in compensation, but much after that it it's, it's a diminishing rate of return. And I mean, that number, especially in the United States, I mean, it's not hard to achieve that as a sales, as a professional salesperson with zero to two years experience.
So the question is, okay, you know, if we're not really making these salespeople any happier by throwing them bigger and juicier comp plans, then why are we putting these comp plans in front of them? What is that doing to them? And what is that doing to the industry in general? I'm fuzzy on the details, but, uh, I think it was in, um, In Daniel Pink's book "To Sell Is Human", he examined a couple of different organizations and their comp plans.
And one of them really wish I remembered the, the info on this, but one of them, the entire organization across the board, sales, not sales, whatever they were comped on, on profitability or profitability growth or something like that.
And turns out that worked really, really well to get their sales people, to sell. Um, it's just like that fundamentally is the, the job, right? Like, Hey, as an organization, as an entire group, we're pulling our skills together to ideally provide value to the market, our customers, our clients. And when we do that, well, we'll get rewarded with revenue, which we should ideally be able to turn into profit, not, "Hey salesperson, if you sell this, we're gonna give you 10% of it.
If you beat your quota, then we're gonna give you 30% of it", whatever it is like that. It's so simplistic and disconnected from actual value that it, I, it drives for behaviors, I think in a lot of cases.
What do you think needs to change in how leadership leads and management manages in the sales environment?
Marcus Cauchi: So the big question then is what do you think needs to change in how leadership leads and management manages in the sales environment?
Andy Racic: That's a question I've been, I've been chewing on for months and years, honestly, and I, I don't have a good answer for it. So, uh, I sp ent a lot of time, uh, interacting with, or rather following Scott Leese on Twitter, LinkedIn, et cetera. He and I happen to both live in Austin. So I've, I've met him at an event.
And, um, just the other day he, he put out something on Twitter and the gist was when the CFO sends out an email that everyone is responsible for revenue. It's like, yeah, but you know, Hey, if, if we don't meet the revenue gold, does everyone get fired or does it just salespeople to get fired? It highlights that issue of, you know, Hey, it is, it is the whole organization's goal and challenge to hit these goals, but whose whose earnings, whose, whose livelihood is really on the line or who's, who's putting their, their name and their, their neck at risk.
And traditionally, most organizations, it's just salespeople. And she's like, yeah. I mean, obviously you gotta make sure that the people are doing their job because salespeople in many spots are the, the top of the funnel. And it's hard to tell whether or not someone is doing their job and just unlucky or, you know, just whatever it is.
Or maybe they need some coaching training or they're, they're doing their job and just not getting any results or they're just not doing their job and pretending they're doing their job, like there's questions there around, Hey, is someone really performing, but outside of that, using just revenue to measure a salesperson performance is, it's a bit shortsighted, but it's just, it's so easy compared to, you know, a, a more sophisticated method of doing it. But I don't know, I really don't know what that more sophisticated or better method is. I really wish I did.
Marcus Cauchi: What I'm seeing working much better is account penetration and portfolio penetration within the account. So do they buy and use multiple products and services and do they use them to their full capabilities? Do they derive the maximum value? Do they stay as customers? So repeat levels and referral levels are really important. And if you look at the companies that really focus on those metrics, so customer lifetime, they focus on customer satisfaction levels.
They focus on generating and I have a real bee in my bonnet about this. The amount money that is squandered on pointless, interruptive, unwelcome marketing is shocking. When you think 265 Billion dollars a year was spent last year on Google and Facebook ads that got zero interaction. Um, 1.73 trillion ads they're served up on Facebook, got one click.
You've got MDF in the channel being squandered on product information that only engineers read and no one who can say yes read. You've got popup ads.
How many corporate email subscriptions are you subscribed to?
Marcus Cauchi: And let, let me ask you this. If you look at your email feed, how many corporate email subscriptions are you subscribed to?
Andy Racic: Well, I gotta break that down a little bit. Did I choose to subscribe to, uh, I don't know, four or five? How many do I get?
Marcus Cauchi: That was the question I meant to ask, but carry on the ground set. Cause that you just make my point better.
Andy Racic: How many do I get and unsubscribed to? It varies week to week and you know, depending on how much noise I'm making in social channels and whatnot, but there's a bunch that just come in.
It's like, oh yeah, I never subscribed. And like, I get it, you know, here in the US, we don't have, you know, GDPR or anything like that. So we're a bit more lackadaisical about throwing people into, in the lists and whatnot, but it's, it's just as annoying and there's plenty of companies. They're like, oh yeah. Hey Andy, like, you know, good to see you sign. It's like, I never sign up for anything actually guys.
How many do you look forward to receiving of the four or five email subscriptions?
Marcus Cauchi: So let me ask the next, the follow on question, of the four or five how many do you look forward to receiving?
Andy Racic: It's kind of bad, but. Honestly, not even that much. I mean, like, I, I, I intentionally chose those organizations cuz they put out some really good info and really good data like, uh, Gong and Chorus are kinda like top of mind for me as far as companies putting out really good, valuable data. But that stuff comes in and it's just like, oh, I'm in the middle of my workday work week, whatever it is.
And it's just like, I, I'm not like, oh, let me stop. I got the new, new issue, basically. Not even any of them, honestly.
Marcus Cauchi: So even the good stuff that gets put into must read later and never get rounded doesn't work. When was the last time you sat through advertising on television?
Andy Racic: Uh, years, honestly.
Marcus Cauchi: So we are now talking about probably hundreds of billions, if not trillions of dollars a year in interruption marketing that generates nothing but resentment. It feels like when people put you into the funnel and Dan Kennedy said this really rather well. He said the cost of the price of free marketing is all the people who will never do business with you as a result of your marketing. Now, I think, and I, I, I hope that we get some hate mail for this, that most CMOs are people who don't realize that they are redundant.
When was the last time you had your marketing people speak to your customers?
Marcus Cauchi: Most marketing departments, their money frankly, would be better spent on charitable causes or lottery tickets tickets, because for the value delivers, it's not helping sales move forward. Mean when was the last time you had your marketing people speak to your customers?
Andy Racic: So I think we're actually getting, getting a lot better about that. We've put in a customer advisory board. So I don't know if, well, I mean, I guess strictly speaking, marketing, isn't speaking with customers, but they're at least listening to those conversations. So they're, they're present for those.
Why are marketing, executives, managers not speaking to customers?
Marcus Cauchi: Why, why the hell are marketing not speaking to customers? Why are executives not speaking to customers? Why managers not speaking to customers? I, if they spoke to customers, maybe they'd actually fucking listen.
Andy Racic: It's a really good question. There's really no excuse for, for not doing that, right? Cause at the end of the day, it doesn't matter what we think. It doesn't matter what we want. It matters what the customer thinks, what the customer wants.
And sure, like we, can't getting into conversations with prospects is hard, but we've got customers that know us and like us and they're willing to speak with us, you know, at least periodically. So why are we not tapping that, that resource as effectively and efficiently as we possibly can? If you don't have a good answer for that, you egg on your face.
Marcus Cauchi: Well, I'd take it a bit further and I think what you should do is speak to the people who fired you and hate you as well. You go to polars the ones in the middle, they find it difficult to explain why they buy from you, but the ones at the polar extremes and the ones who've changed their behavior are the ones we should absolutely have marketing talking to and our executive leadership team.
But I think too many people are afraid of criticism. And that's the only way we're really gonna improve. I mean, as a salesperson, when was the last time you learn something really meaningful from a victory?
Andy Racic: I can't think of an instance, honestly.
The last time you learn from a damn good kicking when you really screwed up?
Marcus Cauchi: What, what, what about from a damn good kicking when you really screwed up? When a customer told, gave it to you with both barrels?
Andy Racic: Yeah, pretty much, pretty much every time. It's not fun to, to learn that way, but it is super effective.
Marcus Cauchi: Absolutely. So we need to learn from our figures. We need to speak to our customers. We need to have everybody who is in. I mean, coming back to your CFO, we're all responsible for revenue.
Well, bloody well behave as if you are. Don't faff about around the periphery saying, well, that's not my job. It is. Anyone who touches the customer is involved in marketing in any way, shape or form. It doesn't ma matter whether it's the first time they come across you, uh, through a customer talking about you behind your back, um, or your marketing or your lead generation or your sales people, or your onboarding folk and your customer experience.
Anybody like that, that's all part of marketing and your brand is defined by one word. Trust. And if you don't understand that you're in deep trouble out there. And, you know, in this economy, in this marketplace at the moment, trust is something that you cannot squander.
When you look at the best performing sales people that you've ever worked with, what made them stand apart from the cattle in the street?
Marcus Cauchi: So tell me this. When you look at the best performing sales people that you've ever worked with, what made them stand apart from the cattle in the street?
Andy Racic: I think one way or another, they, they found ways to, to effectively be in front of more customers and prospects than anyone else. And I put a lot of emphasis and weight on that word effectively, cuz you can, well, not these days, but you can pop by people's offices, knock on doors, shake, hands, drop off gifts and whatnot.
It's nice. Um, it might get you top of mind for a minute or two. That's not being super effective, but the people that are really good, the people that stand out, they find ways to, to add value and to your point to create that level of trust because they're not saying I'm an expert in this market, they're demonstrating, you know, beyond a shadow of a doubt that they're an expert in that market.
So it does build that level of trust so that when their prospect or their client does have that issue, they're willing to pick up the phone or shoot an email to them saying, Hey, I'm struggling with this. Can you help? Or what are your thoughts? And that's really the difference between the, the top performers and, you know, the, the rest of us or the rest of them, because they're going to that length to become that expert in that market.
And then, Hey, you know, when you have a problem, who are you gonna call? Not Ghostbusters. Them.
Marcus Cauchi: Everyone who was listening had Ghostbusters whiz through their head at that moment.
In your experience, how effective is the alignment between marketing sales enablement, customer experience, customer success?
Marcus Cauchi: So tell me this again, in your experience, how effective is the alignment between marketing sales enablement, customer experience, customer success?
Andy Racic: In my personal experience, thinking across the organizations that I've worked at, not great, not, not great at all. In my organization where I'm at right now, we're, we're small enough that we have a good team. And I think we're, we're doing well in getting better at that, but more often than not, those are silos owned by different people that, you know, may or may not eventually report into the same person, but it's just an issue of, you know, Hey, I've got my little kingdom over here, I've got my little kingdom over here and they're not really collaborating on, on strategy and they're not, they're not on, they don't have a, a shared vision and it's just a crapshoot. It really is.
Marcus Cauchi: Given that the customer doesn't give a damn one way or the other, whether you're in sales or marketing or CX, what needs to change at a leadership level in terms of the clarity of communication and the clarity of message for those silos to be broken.
Andy Racic: That's really it, right? You, you need to have a clear vision and a clear idea of, Hey, our everyone's job here, everyone's job at our company is to find ways to effectively serve the customer and to continuously win and earn their business so that there really isn't ever a question in their mind around, Hey, should we renew our contract? Hey, should we consider buying more services from these people? That shouldn't ever be a negative or a bad question in their mind.
Because it's like when I think of Andy or when I think of Tango, yep, I can trust them, they get it done, whatever it is. But you need to have that, that clarifying vision and message from basically the C-suite on down so that we all realize that, hey, one team, one job. And it's very simple. What we do, you know, hey, we, we solve problems for our customers that we make 'em we make, 'em happy to give us their money and their business.
Marcus Cauchi: My pal Martin Lucas describes it, that you have to earn the right to do business. Then you have to earn their loyalty. And beyond that, you have to earn a faith. And I think we've, we've lost sight of that as a profession because we are working towards quarterly quota targets.
We're under pressure to hit those numbers and whilst I get it, but the problem is it's too simplistic. And if we are separate from that whole journey that the customer goes through, then chances are we're gonna try and be as fitting square pegs into round holes.
Personalized playbooks instead of a one size fits all
Marcus Cauchi: I had a really fascinating conversation with Chris Ortalana yesterday, about how he's delivering personalized playbooks that match the customers buying journey and creating playbooks instead of a one size fits all creating playbooks, that map to the customers buying journey. Because so often what I've seen, I, I I've seen it four or five times this quarter alone where really high performing sales people, 140%, 162%, 220% of quota.
And they're being given grief by their boss because they're not putting enough quotes out. They're not making enough dials. They're not doing enough demos. Who cares? I, if they're hitting their numbers, one of the guys, um, who was told that he's not putting out enough quotes, converts 90% of his quotes. You know, on average, this is a really depressing statistic that came out some research from Stanford, that if you are in a bid business, you actually have a 2.6% conversion rate on buying cycles you pursue. That's 1 in 38 and half pursuits, but the only thing that sales measures is conversion rate at the end, you touched on another really important point earlier about being affected seven out of eight first meetings do not result in a second meeting. Have a think about that? Seven out of eight, the amount of time, money, blood, sweat, tears, that's gone into getting those meetings and you deliver no value to those executives.
So they don't invite you back seven outta eight times. Surely. I mean, at some point the evidence has to wake people up, but I I'm just not seeing people getting it. And that concerns me because it does seem awfully wasteful. Doesn't it?
Andy Racic: Yeah, you there's a lot to go into over, through, through what you just shared there.
The thing that, that sticks out to me the most, and I I'll get back to your immediate question right there, but you know, you're talking about high performing sales people where, you know, their, their sales manager, their boss, whatever is saying, Hey, I need you to put out more quotes or whatever it is that kind of stuff kills me.
Cuz I, I look back through, through my career when, you know, when I've been writing high and when I've been not doing so great. And I've, you know, been through both many times, I'm sure many more times, but when I'm doing, when I'm doing my best work and, and closing the most business, it's high touch work on a handful of groups and clients.
And yeah, if I want to spin my wheels and make, you know, a bunch more calls and put out a bunch of basically bad quotes that are gonna go nowhere. Yeah. I can turn that dial, but that's, that's not a worthwhile way to spend my time. And it's just like, how, how do we have sales managers and sales leaders there that they're looking at the numbers and conversion game?
Like, oh yeah. I mean, you're doing really well. You'd be doing even even better if you just, you know, did more of this one thing. It's like, no, you're, you're missing the entire picture of how much work it takes to get to a good proposal. Right? So I mean, sure. If that person's closing 90% of the quotes they put out there, there's clearly something very different about what they're doing, how they're doing it, and probably the amount of work that goes into getting them to the point where they think, okay, it makes sense to put a proposal out there and this is how much work it put it takes me to put out a good proposal cuz I mean they better organization-
Marcus Cauchi: Percent of quota as well.
Andy Racic: Yeah. I mean, they're clearly doing something really, really well. Right. So let's actually dive into that and learn more about that instead of saying, Hey, do more. It's like, Hey actually, can you give us a little information about this?
And maybe if we can take that to the rest of our team, we can all do better versus give me more. How lazy can you be as a sales manager to say, hey, give me more like, you're my golden goose.
Marcus Cauchi: Which they then end up killing.
Over Assignment of Quota
Marcus Cauchi: I think to a large extent, it's down to how leaders and owners drive things. Because one of the things that really gets my goat is over assignment of quota. Now, if you got a revenue target of 50 million and you add up all the quotas of all the sales people and they come to 75 or 80, that tells you that there's something amiss because whilst you hit the 50 million mark and the CFO and the CEO of clanking glasses of champ, uh, champagne, the private equity people are happy it means they've hit their numbers as well. The people who getting them there are burnt out and disgruntled because most of them aren't hitting their quota so they don't get rewarded. So they leave.
Andy Racic: I firmly firmly believe that whoever it is that's responsible for assigning quota should, at some point in their past, um, be, have been a quota carrying salesperson in at least a somewhat relevant job or industry.
Cause if you're, as the CEO, CFO setting quotas, um, and you've not been a salesperson or you've not been a salesperson in anything relevant to what you, what your business is now, you're doing it pure almo almost certainly purely from a self-serving standpoint. And you're not taking into account the people that are putting themselves under that pressure to make you rich while they make themselves a little bit of money.
Not, not a, not a bad amount of money, but comparatively way less. So it's just. Is that, is that really how we, how we feel about sales, people that they're, you know, disposable assets that we can, you know, bring em in, use 'em up. And when they get burn out, you know, let 'em leave and we'll hire a new new person. I guess you can get through. It does work. But I don't think it's the most effective, right?
Cuz the amount of time that you're spending hiring training, new people, just because you burnt out the last crew that cannot be the most effective way or even the most profitable way of running a business.
Cost of a Bad Hire
Marcus Cauchi: Well, it definitely isn't when you consider the cost of a bad hire in the enterprise space, that can be anywhere between 35 and 125 times salary.
Now you don't wanna be making too many of those bad hire mistakes. It takes 38 months for a company to recover. When a salesperson leaves, it takes three years for a salesperson to hit their real peak in a role based on the academic research, that's come out of places like Portsmouth, uh, Stanford and so on.
And what frustrates me is that, that I, I don't think leaders are asking enough of the right questions of themselves. And they're so fixated on the symptom rather than looking at the cause. They're not looking at the causes of success. And what they're looking at is the symptoms of failure. And I think there's a huge gulf to be left there that leaders need to take stock and they need to take more responsibility for the questions they're asking themselves.
If, if you haven't yet read it, the Road Less Stupid by Keith Cunningham is a must read for anyone in leadership or management. Principles by Ray Dalio also critically important read, because I, I don't think that people are learning sales based on principles. They're learning techniques and moves and tactics.
And if you just do a move on someone it's manipulative, but if you understand the principle that you are there to help to diagnose what the problem really is and help them realize it. Cause if they knew what the cause of their problem was surely then it fixed it already. So I think there's a, a huge gulf here.
And again, another major bug bear that I have is the lack of runway and the lack of training people have to move from a producer role into a management role.
What would the program look like in terms of the 12 to 18 months before they were promoted into the role?
Marcus Cauchi: So if, if you had your brothers and you could prepare the next generation of managers, what would the program look like in terms of the 12 to 18 months before they were promoted into the role? And what would they be doing whilst they were a producer to learn how to be a manager?
Andy Racic: That is a sharp question. I think what I would, I would start with is, um, I wanna say it's, uh, Ken Blanchard's work, uh, around, uh, The One Minute Manager and a lot of, um, skills training and whatnot. You know, he looked at the, the four kind of zones someone can be in throughout any sort of skill development. And I should know this off the top of my head, but especially like, you don't know what you don't know, you know, what you don't know, then they kinda-
Marcus Cauchi: Are we talking unconscious incompetence?
Andy Racic: Yes, yes, yes.
Marcus Cauchi: Conscious incompetence, unconscious conscious competence, and then unconscious competence.
Andy Racic: Yes. Thank you. I would basically design that experience. So you have your, you know, your top performing rep and like, hey, we're, we're looking at you for management. He needs you to start understanding and identifying this is what sales management actually is. Cause it's, it's probably one of the, one of the biggest pitfalls that people get into in their career is thinking, "Oh, if I can do this job, I can manage this job."
But you know, aside from a handful of natural talents out there and who knows if those actually exist or not, if they're just fast learners, there's so much that goes into figuring out how, how to lead effectively and how to manage effectively. That you need to, you need to guide people through that. And first you need to, of course, you know, Hey, let's, let's look at where their skills are.
Let's look at where their gaps are and then let's work with them from there. But until you start from, Hey, let's just do a, a gap analysis. You're not gonna be doing any meaningful work.
Marcus Cauchi: I'm gonna challenge you on two points. The first one is no one pops out their mother's womb either to, uh, able to sell or to be a manager.
So that's entirely learned. And the second thing is in my experience, top producers are not necessarily wired well to be great managers. Some are. But if I look at the people that I've interviewed for these scale ups and hyper growth podcast, the best managers were almost never the top sales people. The best leaders were almost never the top sales people.
Four Fundamental Functions of Managers
Marcus Cauchi: And in fact, Google's research on Project Oxygen suggests that the ability to do the job comes eighth in the rankings. The number one is that, uh, people in the team recommend joining the team to people they know like and trust. And that means that the manager has their back because I think managers only have four fundamental functions. Hire the best people.
If you hire the best people, 95% of your management problems disappear. Get the best out of them. And this is the bit that they well, they, they fail to recruit well, because most recruit reactively when a vacancy falls free, cuz they've just fired someone. Um, and the second bit is get the best outta them. That means pre onboarding, onboarding, training, coaching, coaching, coaching, ridealongs, mentoring, accountability with consequence and all of that kind of stuff.
Then make sure they have the tools and resources. They need to do their best work every day. And that doesn't mean every shiny object. It means having the right tools. So things like Gong, Refract, Chorus, I think are, especially now that everybody has become an SDR and every conversation with every prospect can now become a great learning opportunity.
I think those tools are really valuable, a good CRM that's defined in such a way that it actually helps drive sales forward or disqualify early. But beyond that, I'm not entirely sure you need a whole heap more tech, but you do need to have the tools. You do need to make sure that you are rehearsing.
There are pre core plans, post call debriefs, red teams and white teams. Before you go in to meet the prospect so that you can tear the opportunity apart and put it back together again, before you go in and those sorts of things. And then help clear the roadblocks and protect them from acts of idly from above.
Cause when you look at, you know, the CFO at the moment, They're probably thinking let's just slash and burn. Let let's cut off a limb and save 30% across the board indiscriminately. You know, to come back to your earlier point about, uh, setting a quota, surely it makes sense to apply some science to, well, what is it that's actually feasible within this market within this territory, uh, within these accounts. Is there the growth potential to grow by 40% or are we just putting more onus, uh, on the sales people and more pressure on them in order to grow the revenues without any chance of them hitting those numbers?
Given where we are, economically, financially, what do you reckon is coming down the pipe for the sales profession over the next six months?
Marcus Cauchi: Cause that has to be incredibly demoralizing and it certainly used to be in my day before I was unemployable and fireproof and it just strikes me that, that we, we have to take stock. Given where we are, economically, financially, what do you reckon is coming down the pipe for the sales profession over the next six months?
Andy Racic: Oh, there's gonna be happen happening and continuing to happen. We will see that the people, you know, still employed in their organizations are gonna be some of the most valuable members and ideally smart management and leadership will spend the time to do a premortem postmortem what you gonna call it. Just properly analyze, Hey, what what's going on with these people?
What set them apart from what happened with the rest of the crew that isn't here right now. And I mean, just create the business cases of, okay. So this is the amount of time this person took onboard. Okay. These are the things that they're doing with their, their prospects and their clients. And that, that should basically generate the, the next generation of playbooks.
And hopefully from there, we're gonna see a lot of the stuff that you and I have been talking about throughout this conversation around. Yeah. I mean, you know, they, they had a quota, but you know, they didn't really pay attention to it. They paid attention to, how do I actually add value to these people?
How do I earn their trust? How do I earn the right to ask them for their time? Hopefully that'll become the new status quo. I'm a little bit cynical thinking that that probably won't happen just because we've gone through economic downturns before, you know, we challenge our salesman out for however many years.
And like this stuff has been in our faces for as long as it has been. And of course, some of us are aware of, yeah, this is what we really need to pay attention. And this is what we don't need to pay attention to. But there will always be another, the next generation of non-sales leaders or even sales leaders that are just flat out ignorant of all these things.
I, it may just be the same old thing, but I'm, I'm curious. I bet you've got, i bet you got some thoughts on that.
Past performance Vs Repeated Past Performance
Marcus Cauchi: Well, I, I think we're going into a blood bath. When the government furlough schemes and support gets lifted. I think sales, the, the areas that always get cut, sales, marketing, training, and recruitment, the four things that you should be doubling down on, but do well. And let learn how to hire well. Learn how to hire predictably and identify that Andy is going to work out in the role for which I'm hiring him, as opposed to going off things like skills, experience and results.
Past performance doesn't necessarily predict future performance. Repeated past performance does. So what you are looking for are things like habits. I wanna see that Andy has a prospecting habit and I don't need to have my boot on his neck to have him prospecting every day. I, I want to know that he's a planner.
So when they come for interview, I wanna see their pre-call plan. I want to know that they've given some thought into developing some challenging and insightful questions. Interviews should not be a passive act on the part of the interviewee. I think in a sales interview, the salesperson should demonstrate their sales capability by doing a proper agreement upfront, uh, as to what is intended a good agenda.
Um, they should diagnose the problem that they are there to help fix. Um, and then they should do the budget step and they should establish a clear decision. Um, and if a salesperson doesn't do that in an interview, why the hell are you hiring them?
Andy Racic: That's a, that's a really good question. And that's ever since. Even even actually getting into my, my very first sales job, I was, I was starting to do those things. Not, I didn't didn't necessarily know what I was doing, but that's, that's what I was doing from the start. Cuz you know, I was, I was attacking that problem with all of the tools that I had available. And there's, there's really no excuse for, for not doing that as a candidate on the front end or, you know, screen for that as a hiring manager, regardless of which you know, which role you're in.
Prospect For Your Next Job
Marcus Cauchi: I think it, uh, in the early stage as well, a lot of salespeople are gonna be laid off. And my advice to anyone who's being laid off is prospect for your next job. Do not go for the advertised market cuz they're, you're gonna be one of a 400 or a thousand candidates applying for it. Prospect your way in call, call your way into the CEO, the CRO, the VP of sales, because you know that the people on their payroll at the moment probably aren't doing that.
So the budget comes from firing their bottom tee sales people. You get paid two salaries instead of one. And one of my clients has just done this and it, it took him four weeks to go from not having a job, to having an, or an offer with a really good company. And he designed that role himself. And what's more, he got the comp plan that he wanted because he act actually demonstrated that he was worth it.
And from a manager's perspective, I think an interview should not be a pleasant experience for the candidate. You should put them under pressure because that's the person they're gonna become when they're in front of some gnarly, hairy ass chief financial officer or procurement. And if they roll over, if they start running their mouths, that's a really good indication of how they're gonna behave under pressure.
When they're out on your payroll, in the field, in front of your customers and prospects. I think there's gonna be a blood letting and there are gonna be a lot of salespeople outta work from September to the end of Q1 next year. And it's gonna force managers who realize what they're dealing with to take stock.
And hopefully the smartest ones will take a blank sheet of paper and they will redesign their marketing sales and their customer experience process, and team from scratch. Because if you don't do that, then all you're gonna be doing is putting duct tape on broken pipes. And that's gonna be a real problem later because we're, we're probably, this is my fourth, fifth, fifth, fifth, fourth, multiple recession.
I joined the labor market in a recession and I've gone through two or three others since. So this one is far away the worst. And what governments didn't do last time was they didn't fix a real problem. All they did was they bailed out the banks and they encouraged them to do the same stupid things all over again.
Then we've driven down interest rates to nothing. So now they're printing money, like it's going out of fashion. So we're gonna ha hit inflation. So I think globally, the macro picture is that we're looking at five plus years of real hardship. As a country, the UK is gonna be paying off this pandemic for 30, 40 years.
So you have a choice. You can either suffer along with everybody else, or you can be smart and you need to really rethink, uh, what you're doing in your sales operation and be far more customer focused and really focus your marketing and getting customers to do that for you have them talk about you with enthusiasm, really focus the metrics.
Of the sales and the marketing teams around retention customer satisfaction and concentrate on recruiting well, and then really developing your people. Scott Le I'm a huge fan. Whenever a salesperson is struggling, the first metric he looks at is how much training they put themselves through on his cafeteria system.
As a salesperson, you are personally responsible for your development.
Marcus Cauchi: So they have 60 hours of free training available to all their sales people every single month. And if they haven't in, uh, invested in themselves, that has to raise the question. And that then brings me to, um, a point that I'll wrap up on, on this rant, which is as a salesperson, you are personally responsible for your development.
No one else, not the company, not your boss. You. And if you're not investing in yourself, then shame on you and you deserve what you get. Thoughts?
Andy Racic: A hundred percent. Hundred percent. Um, I mean, you can, you obviously take advantage of the resources that are given to you. I mean, you know, attend the trainings, take notes, be present, get value out of it, you know, apply those lessons that your company, your manager gives to you.
But that will only take you so far. And in, I don't know what the percent, but the overwhelming percentage of organizations, there's just not enough training in coaching there. So if you really want to get the most value out of, or if you wanna really maximize your own career, you know, and you know, grow as fast as you can, you need to take a lot of put a lot of the onus on your own shoulders to find the books, find the podcast, find the seminars, et cetera.
You mentioned earlier, I'm in revenue collective. Revenue collective is a dues paying organization. I didn't even ask my company to see if they would sponsored. I just said, yep. I, I want to be in and I'll pay the money myself, same kind of thing. Scott Ingram runs a pretty good podcast and he does a, a show for it every year. I went to the show, just paid out of pocket for it, cuz I, I was invested in my own development and I am invested in my own development. So if you're, if you're not spending the time to continue to grow your own skillset, you really have to ask yourself, are you seriously in this, you know, for the long term or is this just a temporary stop in your professional journey?
Forecast Meeting: A Big Waste of Time
Marcus Cauchi: Well, I, I think you've touched on something else, which I'd like to elaborate on, which is from the manager's perspective. One of the biggest crashing wastes of time is the weekly work that people have to endure, which is the forecast meeting. Why does that have to be 10 people sat around and listening to nine other people lie from a work of fiction.
That should be a one on one activity. And every time you have the sales team together, that should be a learning exercise. Don't waste 10 man hours of time when you've got your team together, by using it to listen to people report from the their pipeline report. That's a three minute, a day conversation between manager and rep and, you know, use that time every week so that people look forward to it.
Patrick Lencioni, his book, Death By Meeting is a must read for any manager. And he asks the question: Do you look forward to a meet, uh, going to your meetings in the same way that you look forward to going to a really good movie? And do you come out of it excited. Do you come out of it energized or do you come out of it like you've had your weekly asks, kicking? Because that just seems to me to be a crashing waste of resource. What are your thoughts?
Andy Racic: I agree wholeheartedly, you know, since I've been in a leadership position, I've, I've never held a forecast group meeting kind of thing. Cause I, I agree. It's, you know, I've, I've been in them as a, as a rep and as an individual contributor and it's a, it's a total waste of time. And you think about, Hey, what, what, what value could we be getting out of this time?
You know, if we were, you know, attending to our accounts, prospecting, et cetera. Infinite more value than us all sitting here. That should definitely be part of a one on one. I was really fortunate in that early on in my career, the president of our organization, uh, he, he came in and he came in to kind of, you know, shake things up and he did it in a really good way.
But one of the things he said is like, "Hey, if, if anyone in the company myself included send you a meeting request without a clear agenda, feel free to decline it." And same kind of thing. If the agenda is bad, just like, yeah. Like let's, let's make sure that if we're spending time to meet, there's a real value to do it.
Cause meetings are they're expensive. Yeah. And you're spending your salaries, multiple people's salaries to meet over something that could be an email. That one person just spends a little bit of time to, to sit there and compose. Like meet only if you have to and definitely meet when you need to, but don't meet any more than you need to at all.
It's this terrible, almost like, uh, I think people are scared of making decisions by themselves. So they wanna meet with people sometimes to, to get a little bit of group consensus and then kind of shift the risk and shift the burden of the decision to other people. And I don't know, but meetings are there's, there's too many. There's far too many bad meeting.
Marcus Cauchi: On that note, I mean, covering your ass is one thing, and that's what, uh, has happened increasingly in buying organizations as well. So what we're seeing is that there isn't anywhere near enough account coverage by reps. And I think that should be something that should be tracked and measured.
Um, if you're going into an opportunity, even with a sub 200 headcount organization, you've got four or five people who are likely to influence or make the decision. And when you're going into an enterprise, you're gonna have 7, 8, 9, 10. And the average coverage for all reps is under two people within each account.
Now that to me is a travesty and that's a fault with management because they're not having people held to account for why they don't have that account coverage. I'm working with an MSP at the moment. And since we've started to do that, they've gone from an average order value of three grand, and they're now picking up six figure deals.
It's not that hard. I mean, it's over a four month period because now they're covering the account. Sales are moving forward because now they're picking off all the right people. They're having the right conversations in the right way with the right people at the right time. And then they bring them all together for a decision.
But I, I see a huge posity in terms of sales, professionalism. Because they're so busy being busy because I think that's what gets noticed by average and poor managers. And he's really, you know, works really hard. Well, who cares if Andy works really hard, uh, if he's 40% of quota, then that means he's leading 60% of our income on the table.
What are you struggling with at the moment?
Marcus Cauchi: Okay. Te tell me, what, what are you struggling with at the moment? What are you wrestling with?
Andy Racic: I'm probably most struggling with how to build a strong relationship with my team. I've hired during the pandemic. So people that I've interviewed in person, but have not seen in person since. And how do you build a strong relationship with someone that you, you don't see, you know, at all in person and also, Hey, they're, they're a new salesperson in an organization during a pandemic in a global recession. Right? That's what I'm struggling with more than anything else.
Marcus Cauchi: Okay. Do you mind if I ask you a couple of questions about that?
Andy Racic: Sure.
Do you intentionally find out what their personal drivers and motivations are?
Marcus Cauchi: When you interviewed them and you brought them on board, do you intentionally find out what their personal drivers and motivations are?
Andy Racic: Yes, not necessarily as, as well, or as deeply as I could have, but that is something that I do cover.
Marcus Cauchi: Okay. Cause if you don't understand that, so for any managers out there, if you don't understand a salesperson's individual personal motivations, it's very difficult to remind them of those and tie them back to the corporate objectives.
In the pre onboarding phase, what process did you put them through?
Marcus Cauchi: Second thing in the pre onboarding phase, what process did you put them through?
Uh, in order to ensure that when they joined then all the housekeeping stuff had been taken care of, you know, they were familiar with what good call and a bad call sound like. That kind of thing.
Andy Racic: Uh, it's embarrassing, but I didn't have, I don't have any of that infrastructure in place. I don't have any of that process in place.
Do you have a structured, formalized onboarding plan?
Marcus Cauchi: Okay. In terms of the first 120 days, do you have a structured, formalized onboarding plan? Whether they're veterans or green, uh, greenhorns salespeople that identifies what they need to know by when they need to know it. Where they can find it, how you're going to measure it into what's standard and what the consequences of not achieving those milestones are.
Andy Racic: Structured and formalized. No. Are those things covered during onboarding during the first, you know, is that structural laid out in the first week? Yes. But structured, formalized? No.
Marcus Cauchi: And are, are they held to account for it?
Andy Racic: Yes.
Marcus Cauchi: OK. Those first hundred 20 days are when they're putting you on probation. And they're deciding is my boss an ass? Is this the job I was sold? Was I better off where I was? Have I made a terrible mistake? Do I like the company, the products, the customers? And that first 120 days is where you set them up to succeed or fail. So it's really worthwhile building a structured 120 day onboarding plan and make it part of the interview and selection process.
But you take them through that. So that it doesn't come as a surprise. And you are clear about what the red flags are. Cause the, the rule is, well, the two rules, better no breath and bad breath in a sales territory and, uh, higher slow-fire fast. So if someone hits red flag after red flag, that's an indication that maybe you've made a bad hire and you should get rid. But you need to give them the opportunity to redeem themselves.
So there's an escalation process. A fabulous book that's worth a read by Hamish Knox called Accountability. And he's got this cadence of taking somebody through this performance improvement or out in the event that, uh, you have made a poor hire.
If you had a golden ticket and you could whisper in the ear of the idiot Andy aged 23, what choice bit of advice would you give him?
Marcus Cauchi: Cool. Okay. Tell me this. If you had a golden ticket and you could whisper in the ear of the idiot Andy aged 23, what choice bit of advice would you give him?
Andy Racic: Trust the process of what your, what your good sales managers are teaching and telling you, and just put your ego out of mind as, as much as you can. It's not easy to do, but just put it out of mind and, and trust in what they're teaching you. Uh, there's a reason that they're doing it and it's because it worked for them. And it'll probably work for you if you can get over yourself and out of your own way.
Marcus Cauchi: Again, it's interesting that you say that cuz one of the things I see managers do very often when they do on ride alongs, for example, is they say, let me show you how I did it or how I did it, but there's no real knowledge transfer there.
I think that the whole piece of about subordinating your ego is really important because the prospect doesn't care. And if you get knocked down by the number 73 bus, the best you can hope for is, oh shit, Andy's gonna make me late. So it's not about you. It's always about the customer.
What are you reading, watching, listening to at the moment that really impressed you?
Marcus Cauchi: Okay. What, what are you reading, watching, listening to at the moment that really impressed you?
Andy Racic: So I just finished a kick on a bunch of neuroscience-decision science type books. So this was Thinking In Bets, by Annie Duke, the former professional poker player. This was Thinking Fast And Slow by Kahneman and nudge by Richard Thaler. All of these books, they kind of wrap around the same kind of stuff, but it's, it's looking at how people make decisions, as well as the cognitive biases that we're all subject to.
So not only, you know, how do you make better decisions and how do you make sure that you're not making poor decisions, but also, you know, hey, let's, let's be aware of the fact that we're, this is a people game we're working with and dealing with people. So what kind of mistakes might they be making and how do we either help them avoid those or without being manipulative about it, but how do we exploit some of those things? Right? So let's, let's talk about, you know, hey, how do we, how do we phrase things as best we can? How do we make sure that we're getting the right, right results?
How can people get hold of you?
Marcus Cauchi: Excellent. Andy, thank you so much. I've thoroughly enjoyed this conversation. Tell me how can people get hold of you?
Andy Racic: Uh, LinkedIn is definitely the best way.
Marcus Cauchi: Okay. So this is Marcus. KKI signing off once again from The Inquisitor Podcast, Andy Racic thank you so much.
Andy Racic: Marcus, really appreciate the opportunity. Thank you.
Marcus Cauchi: My pleasure. If you guys are interested in finding out more about what we discussed, then please ping me or Andy via LinkedIn. You can email me at marcuscauchi@me.com or mcauchi@sandler.com. And uh, if you think you'd be a good guest or you believe that, you know, someone who would be an interesting guest, then please ping me an email or get hold of me on LinkedIn. In the meantime, stay safe,happy selling. Bye bye.
Contact me on marcus@laughs-last.com if you want to be a guest or want me to interview someone specific.
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