The high performing Ed Tech sales rep: it isn t who you think it is

Transcription

1 The high performing Ed Tech sales rep: it isn t who you think it is Maximizing the potential of your Sales DNA March 28,

2 Does this look familiar? Variation in seller quota attainment Top performers typically outperform bottom performers by 3-4x 100% What if you could understand the drivers of this variance with science? Bottom performers Top performers Aggregated results across several sales forces 3

3 McKinsey surveyed growth tech companies in order to identify the characteristics that define the most successful sales organizations Sales DNA 511 CCAT growth tech companies surveyed sales reps assessed on72 attributes covering skills, intrinsics, motivators, and cultural enablers commercial capabilities assessed across price & contract management, innovation & product management, sales & account management and sales support 4

4 Over half the companies we surveyed said The majority of their sales reps FAIL within the first 3 years 5

5 Getting big in education typically requires large investments in a salesforce Annual Revenues $1 bn+ $250 mn- 1 bn $50mn - $250 mn Number of players Description Traditional textbook publishers School operators/ education providers Digital platforms (LMS, SIS) and hardware Tutoring/test prep/assessment providers Established supplemental materials/services providers New players gaining a foothold or monetizing users Example Companies <$50 mn New players with users not yet monetized or just starting 6

6 Ed tech companies also face particular sales challenges Multiple decision makers ROI is harder to demonstrate and measure Long sales cycle Interoperability Price sensitivity 7

7 We used proprietary McKinsey tools to assess individual sales rep and companies commercial capabilities Sales DNA assessment tool codeveloped with a professor at Notre Dame Commercial Capability Assessment Tool (CCAT) measures the commercial capabilities of any sales organization Taking a 360º view of what drives sales performance that doesn t impose a generic best practice on the sales force; identifies key traits for unique sales models 8

8 We measured sales performance along four key dimensions 1 Find people with the right personality traits 2 Build skills that matter 3 Motivate the right way 4 Reinforce with the right commercial capabilities Getting these four dimensions right can drive a sustainable 5-20% lift in revenue 9

9 Participating companies had an average of $35 million in funding and $40 million in revenue Financial demographics: Investment and revenue Outside investment received to date, % (Sum=100%) $250+ M $60 - $250 M $35 - $60 M $15 - $35 M Revenue last year, % (Sum=100%) $250+ M $80 - $250 M $40 - $80 M $20 - $40 M Less than $15 M 13 $10 - $20 M 22 SOURCE: McKinsey survey to participating companies Head of Sales 10

10 Participating companies have a real need to better attract and retain high performing reps Percent reporting 50% or more of their sales rep hires in the past 3 years were unsuccessful % of segment Vertical Ed Tech Thirty-six % of companies reported more than 10% of successful sales reps left within one year % of participating companies (Sum=100%) >25% >10% to 25% <10% Horizontal 50 0% 33 SOURCE: McKinsey Head of Sales survey to participating companies 11

11 What you sell and how matters: High performing reps have different Sales DNAs depending on their selling focus Selling Model Distinctive Sales Rep Persona Vertical focus Sell industry-specific tools (e.g., retail store analytic solutions) to companies in one sector Is able to convert smaller funnel by convincing the customer I know your business better than you do using trust building, strong objection handling, and robust problem solving intellect Ed Tech focus Sell B2B online learning tools for K-12 and higher education Demonstrates traditional tenacious sales rep skills. Builds trust and leverages experts, is good at target setting, motivated by rewards, and less empathetic than less successful reps Horizontal focus Sell function-based solutions (e.g., HR service solutions) to companies across multiple sectors Excels at efficient pipeline management and not wasting time on less attractive opportunities. Can tailor value props to specific situations and more internally motivated SOURCE: Sales DNA survey 12

12 Personality traits: Traits highlighted are those that differentiated high Significance of trait performing reps from poor performers High Medium Not Significant Negatively Significant Sociable Positive Socially Attentive Dominant Assertive Ambitious Detail Oriented Persistent Dependable Achievement oriented Dutiful Planners Extraversion Openness Diligence & Achievement Agreeableness Humility Curiosity Confidence Stress Management Proactive personality Top performers are less empathetic than the poor performers Empathy Resilience SOURCE: Commercial Diagnostic Suite Sales DNA 13

13 SKILLS Skills: Skills highlighted are those that differentiated high performing Significance of trait reps from poor performers High Medium Not Significant Negatively Significant Presence and rapport Network and maintenance Trust building New introductions Review and follow up Contact strategy Target setting and potential Sales strategy Cold calling Prioritization Identification Time Relationship and network building Account Planning Prospecting Pipeline management Understanding customer needs Product Knowledge Value Proposition delivery Time management Use of experts & support Use of tools + Resource management Negotiation and closing SOURCE: Commercial Diagnostic Suite Sales DNA 14

14 SKILLS Skills: Skills highlighted are those that differentiated high performing Significance of trait reps from poor performers con t High Medium Not Significant Negatively Significant Relationship and network building Account Planning Prospecting Resource management Listening Match offering to need Probing Knowledge of customer Value prop creation Presentation skills Style and impact Competitive knowledge Cross and upsell SOURCE: Commercial Diagnostic Suite Sales DNA 15

15 MOTIVATORS Motivators: Top Ed Tech reps are more motivated by financial rewards Significance of trait and find great satisfaction in selling High Medium Not Significant Negatively Significant Top performers are significantly more motivated by financial rewards than their weaker performing peers Financial rewards Non-financial recognition Autonomy Competency Meaning and Purpose in my role Belonging Growth Goal Setting Top performers love being sales reps and their weaker performing counterparts do not Drive and Will 16

16 Cultural perception: Top Ed Tech reps feel like their companies are more entrepreneurial but aren t as performance oriented Entrepreneurial Customer Service orientation Leadership (support of me) Direction of company Supportive Environment Performance Management Top performers feel like their companies are more entrepreneurial Top performers believe their leadership supports their development Weakest performers perceive a much more supportive environment and performance management orientation relative to top performers. This may not be a good thing. 17

17 Summary: Distinctive characteristics of high performing ed tech reps SalesDNA Diligent & Achievement oriented Persistent Extraversion Confident Personality traits Detail Orientation Ambitious Positive (dogged) Planners Target setting and potential Sales strategy Identification Use of experts & support Skills Trust Network and maintenance Time management Probing Rewards Motivators Meaning/Purpose Not as empathetic Knowledge of customer Can cross and upsell 18

18 So how do you find and develop this high performing sales rep? Assess the right traits in in interviews Align rewards and culture to what motivates reps Coach and train on the skills that matter 19

19 Ed Tech companies recruit for the wrong personality traits Significant trait? Yes No No Positivity Ambition Detail Orientation Persistence Assessed in recruiting? Planfulness Diligence & Achievement Openness Yes Stress Management Confidence Extraversion Agreeableness Proactive personality Curiosity Resilience Empathy Sought out in recruiting, but top reps don t have! SOURCE: Head of Sales Survey 20

20 Ed Tech Companies should screen for critical traits by using interview guides and personality tests Recruiting: Interview process, % of archetype (Sum=100%) How many interviews does a candidate typically go through? Do you use an interview guide? No No Yes Yes Do you use a personality test? 100 SOURCE: McKinsey Sales DNA 21

21 Coaching is significantly underutilized in developing critical skills >70% of reps stated they receive coaching in: Pipeline management Account planning... but most don t receive coaching in any other skills Not Relationship or network building Prospecting Resource management Understanding customer needs Product knowledge Value proposition delivery Negotiation and closing 22

22 Ed Tech can likely materially improve the candidates they attract if they put more compensation at risk Retention: Variable sales rep compensation, % of segment (Sum=100%) 1 in 2 of Ed Tech companies put less than 40% of comp at risk 0 Vertical 62 8 Sales rep compensation >80% 60% to 80% 40% to 60% 20% to 40% <20% Ed Tech Horizontal Vertical Ed Tech Horizontal SOURCE: Sales DNA 23

23 Ed Tech commercial capabilities also need improvement Strengths Strategic marketing Customer segmentation Value proposition development Go-to-Market design Digital marketing Innovation & Performance management Product launches Product Service positioning Weaknesses Pricing & Contract management Value pricing Pricing strategy Tactical marketing Performance management Metrics, KPIs, target setting Talent management Capability development and learning Talent review approach 24

24 Major takeaways for Ed Tech Hiring Supporting processes Commercial capabilities Hire great sales people even if they don t have experience in Ed Tech Focus on persistent, diligent and extroverted reps who may rub you the wrong way because they are less empathetic and hard drivers Who have demonstrated traditional sales skills ability to build robust networks, develop specific target and sales strategies, and who leverage experts Improve your interviewing, training, and compensation practices Increase variable portion of compensation and don t have a cap Increase coaching on the key skills that top reps have Provide subject matter experts for support Strengthen key commercial capabilities: Improve tactical marketing to drive more leads Increase pricing capabilities across the board strategic price setting, contract management, and tactical pricing decisions 25

25 Invitation! Join the next cohort of McKinsey Ed Tech sales assessment this Spring! 26