Microsoft Word - The Six Breakthrough Behaviors of High Per…

By Ron Buck

© 2019, Ron Buck

Six Breakthrough Behaviors of High Performers 1

Acknowledgements It always takes a team to write a book. My team includes Bob St. Meyer, Joanne Krettek and Elizabeth Cabalka. I would like to thank Bob St. Meyer and Joanne Krettek for helping me write Chapter Six: The Sixth Breakthrough Behavior of High Performers ( Create a Cadence of Expectations, Accountability and Feedback). I could not have written that chapter without their inputs and support.

I would also like to thank Elizabeth Cabalka for her editorial support.

© 2019, Ron Buck

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© 2019, Ron Buck

Six Breakthrough Behaviors of High Performers 3

Table of Contents  Preface

p. 6

 Chapter 1: The First Breakthrough Behavior Focus On A Few Important Goals  Chapter 2: The Second Breakthrough Behavior Measure That Metrics That Matter  Chapter 3: The Third Breakthrough Behavior Act On The Lead Measures  Chapter 4: The Fourth Breakthrough Behavior Keep A Compelling Scorecard  Chapter 5: The Fifth Breakthrough Behavior Develop Action Plans  Chapter 6: The Sixth Breakthrough Behavior

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p. 14

p. 25

p. 31

p. 46

p. 57

Create A Cadence of Expectations, Accountability & Feedback

 In Conclusion

p. 81 p. 85 p. 92

 Appendix

 About the Author

© 2019, Ron Buck

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© 2019, Ron Buck

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Preface In the fall of 2000, I gathered a group of my consultants together to discuss the state of sales performance in banking. We began by discussing current projects, common performance barriers, best practices and the lack of industry sales data and performance benchmarks. We all believed the banking industry had a lot of good marketing research. However, there were no benchmarks on sales effectiveness metrics like cross-sell ratios, win/loss ratios, time-to-close, attrition rates and conversion rates. It only took a few hours before we made a decision to do our own research to establish industry performance benchmarks and determine the metrics that matter. We invited our existing clients to be part of our research study and asked them to help us recruit other banks and credit unions. In a few years we were collecting sales data from 370 banks on a monthly basis. We used graduate students from various business schools to help gather and analyze the data. Our analysis quickly established benchmarks for a variety of retail, commercial, credit and wealth management key performance indicators (KPIs). We segmented our data by geography and size of bank. We developed data glossaries and data dictionaries. We correlated the KPIs with financial results (net income, ROE, ROA, loan growth, deposit growth and efficiency ratio). We defined high performance as the ability to sustain financial growth (net income, loan growth and efficiency ratio) over a period of time. We found that the highest performers were not necessarily those with the most assets or the biggest budgets for training or CRM. Between 2003 and 2005 we defined and benchmarked dozens of KPIs and mathematically correlated them to financial results. However, we could find no simple or direct correlation between high performance and the use of sales force automation (CRM) software, sales training, incentive programs, coaching programs, sales management, hiring practices, or sales strategy. On the surface, there were no common denominators. During that period of time, we were reviewing other industry research. The Rain Group published a research study that concluded that 90% of sales training had no lasting impact past 120 days. CSO Insights’ research indicated that less than 38% of CRM installations had any significant user- adoption. This was generally true for any genre of software. The Internet was filled with blogs about failed CRM initiatives, sales training programs, incentive philosophies and hiring programs. We were not finding clear evidence of why some people and teams performed well and others did not.

© 2019, Ron Buck

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The data gave us KPI benchmarks and identified the high performers. Next, we decided to do face-to-face interviews. From the fall of 2005 to the summer of 2007 we interviewed over 2000 bank employees. In October of 2007 we organized a two day forum to summarize our research. Each of us brought an in-depth summary of what we had learned from the data and the interviews. During the first day of the meeting we filled flip charts and white boards with ideas. By the morning of the second day we had summarized everything into a small set of beliefs. I. People and teams don’t know their goals. There are either too many goals or they are not clearly defined. Great sales leaders are totally clear about their most important goals. II. People and teams measure results (lagging indicators) and sales activities, but do not measure the few key performance metrics (KPIs) that matter. Great sales leaders measure the metrics that matter. III. People and teams don’t know what to do to achieve their goals. High performers always know exactly what to do to achieve results. Great sales leaders invest their energies in the few important activities that have the greatest impact on the business drivers (KPIs). IV. People and teams don’t know if they are winning or losing. Great sales leaders know at every moment if they are winning or losing. They use scorecards that provide deeper insights. Great sales leaders use the insights to make more informed decisions faster than their competitors. V. People and teams don’t use action plans. Great sales leaders know how to translate scorecard insights into individual and team action plans – frontline tactical plans of sales execution. VI. People and teams are not held accountable. Great sales leaders create a cadence of expectations, accountability and feedback. Ultimately, great sales leaders are responsible for superior sales execution at the highest performing banks.

© 2019, Ron Buck

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Sales execution must be part of every bank’s sales culture. It is the missing link between aspirations and results. As such, execution is a major – indeed, the major – job of a sales leader. If you don’t know how to execute, the whole of your efforts as a leader will always be less than the sum of its parts. Sales execution is one of the biggest issues facing banks. Most often the difference between a financial institution and its competitors is the ability to execute a sales strategy. The absence of good sales execution is the biggest barrier to high performance and the cause of most of the disappointments that are mistakenly attributed to other causes. A traditional business formula for organizational success looks like this: Strategy x Execution = Results Good execution can’t fix a poor sales strategy, but poor execution will always derail a good sales strategy. Most banks today have similar sales strategies. However, the highest performing banks separate themselves with great sales execution. Many sales executives regard execution as the detail work that’s beneath the dignity of their position. That is simply wrong. On the contrary, our research is very clear, great sales leaders consider it their most important job. During our research study we worked with and observed many great sales team leaders. We found that all great sales leaders in high performing banks possess the following six breakthrough behaviors.

They Focus on a Few Important Goals. They Measure The Metrics That Matter. They Act on the Lead Measures. They Keep A Compelling Scorecard .

I.

II.

III. IV. V.

They Develop Action Plans.

VI. They Create A Cadence of Expectations, Accountability and Feedback.

The following chapters discuss each of these breakthrough behaviors and how they can change individual and team performance.

© 2019, Ron Buck

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I. The First Breakthrough Behavior Focus on a Few Important Goals

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Focus on a Few Important Goals Execution starts with focus. Without it, the other five breakthrough behaviors won’t be able to help you. Subsequently, the first sales discipline is to focus your finest efforts on the one or two goals that will make all the difference, instead of giving mediocre effort to dozens of goals. Simply put, the first sales discipline is about applying more energy to fewer goals because, when it comes to setting goals, the law of diminishing returns is as real as the law of gravity. If your sales team focuses on two or even three important goals, they can often accomplish them. However, if they set four to ten goals, my experience has been that they will achieve only one or two. They’ll be going backward! If they go after eleven or more goals, they will lose all focus. Confronted with so many goals the team members will stop listening let alone executing – yet, for the vast majority in banking, that is the current state of sales. So, here is the big question: Why is there so much pressure to expand, rather than narrow, the number of goals on which to focus? If you understand the need to focus, why is it so difficult to actually do it? One reason you may drive your team to take on too much is that, as a leader, you tend to be ambitious and creative. You are exactly the kind of individual banks like to promote into leadership positions. The problem is that creative, ambitious people always want to do more, not less. If this describes you, you’re almost hardwired to violate the first breakthrough behavior of high performers. Another reason you might lead your team to go after too many goals is to hedge your bets. In other words, if your team pursues everything, then it seems likely that something might work. It also ensures that, if you fail, no one can question the level of effort your team gave. However, the greatest challenge you face in narrowing your focus is simply that it requires you to say no to a lot of good ideas. I believe all sales leaders facing this challenge should have this quote prominently displayed in their offices: There Will Always Be More Good Sales Ideas Than There Is The Capacity To Execute.

© 2019, Ron Buck

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Bankers are always asking me to help them identify their Few Important Goals toward which they will focus a disproportionate amount of energy. Sometimes the choice is obvious, but at other times it can be confusing. To illustrate this problem, imagine a sales leadership team in a bank having this conversation: “I’m telling you, finding more face-to-face meetings is the most important thing we need to do to improve sales and it should be one of our Few Important Goals” says one regional manager. “Well, don’t forget, it is our credit (underwriting) process that is causing most of our problems. I believe we should be focused on improving the time required to approve a new loan and get it closed,” says another regional manager. “I’m sorry, but I disagree with both of you,” says a third. “We are losing too much business because our sales force is not selling our value proposition of taking care of our customers.” “SERVICE sells and we need to make it our primary focus.” The result of this conversation is frustration and confusion, along with an inevitable (and paradoxical) loss of focus. The problem with this conversation is that the leaders are asking the wrong question. In determining your Few Important Goals, don’t ask “What’s most important?” Instead, begin by asking “If every other aspect of our sales remained at its current level of performance, what is the one area where change would have the greatest impact?” This question changes the way you think and lets you clearly identify the focus that will make all the difference. From X to Y by When Your Few Important Goals must contain a clearly measurable result, as well as the date by which that result must be achieved. Your Few Important Goals Must Have A Finish Line In The Form of ‘From X To Y By When.’ This from X to Y by when format recognizes where you are today, where you want to go, and the deadline for reaching the goal. As deceptively simple as this formula may seem, many sales leaders often struggle to translate their strategic concepts into a single from X to Y by when finish line. But once they’ve done it, both they and the sales teams they lead have gained tremendous clarity.

© 2019, Ron Buck

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The Few Important Goals at the sales frontline must be aligned with the Few Important Goals at each level of the sales organization. When a sales team moves from having a dozen we-really-hope goals to one or two no-matter- what goals that are directly aligned to the top of the organization, the effect on morale is dramatic. It’s as though a switch exists in every team member’s head called “ Game on!” Clarity and focus on a few no matter what goals flips that switch! It is a remarkable experience. It is something whereby every member of the team can see that their contribution makes a difference. Everyone wants to feel that they are winning and that they are contributing to something meaningful. The first breakthrough behavior requires you to translate your strategy from concepts to targets, from a vague strategic intent to a few specific finish lines.

© 2019, Ron Buck

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I Have Learned That The Rules Governing Focus Are Like The Rules Governing Gravity: These Rules Are Not Concerned With What You Think Or With The Details Of Your Particular Situation. They Simply Yield Predictable Consequences. When you think about it, the principle of focusing on the Few Important Goals is common sense. It’s just not common practice.

© 2019, Ron Buck

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II. The Second Breakthrough Behavior Measure The Metrics That Matter

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Measure The Metrics That Matter

The second breakthrough behavior is about measuring only those things that really matter. In this chapter I will reveal the metrics that matter to retail sales and commercial sales. Most sales managers build their first scorecards with only ‘activity measures’ . It seems natural and logical to measure the number of referrals, number of calls made, number of face-to-face meetings, and new prospects added to the pipeline. The problem with only measuring activities is that what gets measured is what gets done. When the focus is on measuring activity, activity will be done in spades, for its own sake. People will be busy – but busyness does not always translate to results. In tough times, sales managers have a tendency to push harder on the activity accelerator. As a result, they get a lot of activity and the organization gets very busy, but it does not go anywhere. Then they get into a death spiral where the more activities they demand, the more they get, but with fewer results – and down they go. The other, perhaps bigger, problem with activity measures is that they tend to stymie top performers, who are focused on outcomes, not activities. It is average (or low) performers who focus on activities. Average sales managers tend to drive top performers away from their organizations at the very time when they are most needed. The truth is, as our research shows, more does not equal better sales and, in fact, it may be counterproductive as onerous paperwork and fruitless racing about generally frustrate top performers. Tick marks in leader boards get in the way of top performers and waste valuable and scarce resources – the resources that are generating over 80% of the sales. In our ten year research study that included over 370 financial institutions, we found that the highest performers understand that there are a few metrics that really matter. They understand how to measure those metrics and they use them in scorecards to focus their coaching on those few important things that will have the greatest impact on their sales outcomes.

© 2019, Ron Buck

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Retail Sales Figure 1.0 is a simple equation that everyone can relate to. It states that your net sales are equal to your new accounts opened (B x C) minus your accounts closed (D). Your new accounts opened equal # Face-to-Face Meetings (sales conversations) times a sales conversion ratio. In other words, if you have 100 sales conversations and you open 50 new accounts, then your sales conversion ratio is 50%.

Retail Sales Metrics That Matter

A = B x C - D

Net New Accounts

Closed Accounts

# F:F Meetings

Sales Conversion Ratio

Walk-In | Walk-Over | Appointments o # of Walk-Overs/Week o # of F:F Meetings/Day/FTE

(Win/Loss) x (Cross-Sell) x (90 Day Retention Rate) o Branch Sales Velocity o Total New Accounts Opened/Day/FTE o Total New Accounts Opened

o # of Service-Related Conversations/Day o Service/Sales Conversion Ratio

Figure 1.0 The Retail Sales Metrics That Matter

The number of new accounts opened is a function of how many face-to-face sales meetings you have and the sales conversion ratio. If you have 100 face-to-face sales meetings, you win business in at least 60% of them and always sell 1.5 products then you will open 90 new products.

© 2019, Ron Buck

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Face-to-face meetings come from customers or prospects walking in to the lobby, a teller walking someone over to the personal banker or from an appointment that is kept by a lead or referral. In today’s market a typical personal banker has 2 face-to-face sales conversations (meetings) each day. However, they also have 8 service-related conversations each day. Our research show that in a typical month a personal banker has 40 sales-related face-to-face meetings that result in 20 new accounts opened (1.0 new accounts/day/FTE). However, that same personal banker has 160 service-related face-to-face meetings and 2 appointments kept from a lead or referral. If the personal banker can transition just 5% of service-related conversations to sales conversations, the branch sales velocity will increase by 20% - making the service-to-sales conversion ratio one of the most important metrics that matter. Our research shows that only 4.7% of teller referrals result in a face-to-face sales conversation. However, high performing branches measure how many referrals a teller walks-over to a personal banker each week. If each teller walks-over one customer or prospect each week, the branch sales velocity will increase by 20%. Two metrics that matter in this new era of retail banking are (1) number of Walk-Over Teller Referrals/Week and the Service-to-Sales Conversion Ratio. The Sales Conversion Ratio is the product of your Win/Loss Ratio, Cross-Sell Ratio and your 90 Day Retention Rate.

Figure 2.0 Recommended Retail Sales Scorecard

© 2019, Ron Buck

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Figure 2.0 illustrates the recommended retail sales scorecard. It contains the metrics that matter but should be designed with the following design rules (high performer best practices).  Display the metrics that matter with other supporting metrics.  Accurately cascade from frontline to CEO weekly.  Put your performance in context – goals, peer averages, top 20%, and trending over time.  Use the right mix of activity measures, leading measures and lagging measures.  Use intuitive navigation to linked reports – that contain all supporting activity metrics.  The scorecard math must work.  The scorecard should be visually simple – and the metrics that matter should stand out.  Minimize self-reported data.

Figure 3.0 Retail Sales Benchmark Matrix

© 2019, Ron Buck

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Figure 3.0 is the culmination of a decade of research with over 18,000 retail branches at 370 banks in the United States. The figure compares the Total Face-to-Face Meetings/Day/FTE to the Sales Conversion Ratio. High Performers have over 2.75 Face-to-Face Meetings/Day/FTE with a Sales Conversion Ratio of 0.75 to 1.4 – yielding between (2.75 and 5.0) Total New Accounts Opened/Day/FTE. This benchmark matrix is the best way to benchmark your personal bankers to the industry. About 10% of all the personal bankers we studied (about 40,000) are High Performers. About 30% are Average Performers. The best performing organizations focus on just a few metrics that matter when coaching their personal bankers. Recently we worked with a client that focused on improving their Service-to-Sales Conversion Ratio to 5% and their Cross-Sell Ratio to 1.3 and improved all their branches from Average Performers to High Achievers in a six month period of time – increasing branch sales velocity by almost 33%. Commercial (or Business Banking) Sales Figure 4.0 illustrates the commercial sales metrics that matter. Over the past decade we have observed and measured tens of thousands of winning sales cycles. Unfortunately, most commercial or business bankers are focusing on getting more opportunities into their sales pipelines and not trying to maximize the return from their existing opportunities – managing their sales pipeline. Prospecting and increasing the number of new opportunities is, for many teams, the only type of activity that gets real attention. The problem with this is if you focus most of your time on filling the top of your sales pipeline you have less time to increase the chance of winning the deals you already have in process.

© 2019, Ron Buck

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Commercial Sales Metrics That Matter

Sales

= A x B x C

Velocity

D

Win/Loss Ratio

o Stage Probability To Close o Stage Attrition Rates o Stage Conversion Rates

# of Sales Ready Opportunities

Average Time-To-Close

o # of New Prospects o # of Prospects Working

o Average-Time-In-Stage

o Prospect Conversion Ratio o # of Client Opportunities o Client Opportunity Conversion Ratio

Average Deal Size o New Accounts/Loan

Figure 4.0 Commercial Sales Metrics That Matter

Figure 4.0 illustrates a simple formula based on a few metrics that matter. Let’s explore this simple formula – a formula for sales velocity.  A: Number of New Sales Ready Opportunities: Only 54% of relationship managers can access key players – and those relationship managers are 36% more likely to achieve their goals.  B: Average Deal Size: Only 43% of relationship managers maximize the value of a deal.  C: Win/Loss Ratio: The typical relationship manager spends 150% longer on deals that are eventually lost than on deals that are won.  D: Average-Time-to-Close: During the past year, the highest performers in the industry have reduced their average-time-to-close by 20% - improving their sales velocity by almost 50%.

© 2019, Ron Buck

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High performing bankers are very aware of these sales calculations – and the metrics that matter. They are also aware that reducing average-time-to-close has the greatest impact on sales performance. In most cases, however, sales managers only focus on bringing more sales ready opportunities into the top of the pipeline and focus very little time on maximizing the value of those deals. This behavior is reinforced by sales managers who primarily measure ‘sales activity’. They ask questions like “how many calls did you make this week?” or “how much did you add to your pipeline last month?” Alone, these questions drive very inefficient behavior. From a sales person’s perspective, in many ways, adding new opportunities to the pipeline is the easiest thing to do, particularly if that is how they are being measured. Our research shows that (within typical boundaries) there is a linear relationship between D (average-time-to-close) and C (win/loss ratio). The combination of decreasing D and increasing C is what we call sales acceleration. In most cases, reducing your average-time-to-close by 20% improves your win/loss ratio by 20% - together increasing your sales velocity by 50%.

Figure 5.0 Recommended Commercial Sales Scorecards

© 2019, Ron Buck

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Figure 6.0 Typical Commercial Sales Process/Pipeline

Figure 6.0 illustrates a typical commercial sales process (or pipeline). Figure 7.0 illustrates our recommended commercial pipeline scorecard for this commercial sales process.

© 2019, Ron Buck

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Figure 7.0 Recommended Commercial Pipeline Scorecards

Figure 8.0 is our industry benchmark matrix and an excellent way to compare your bankers to the industry. We have developed six benchmark matrix based on various ‘average deal sizes’. These benchmarks have been developed by researching over 15,000 commercial and business bankers. A, B, C, and D are the metrics that matter in commercial banking. High Performers represent about 10% of all commercial and business bankers. Average Performers represent about 30% of all commercial and business bankers.

© 2019, Ron Buck

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Figure 8.0 Commercial Sales Benchmark Matrix

© 2019, Ron Buck

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III. The Third Breakthrough Behavior Act on the Lead Measures

© 2019, Ron Buck

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Act on the Lead Measures The third breakthrough behavior is to apply disproportionate energy to the activities that drive your lead measures. This provides the leverage necessary for achieving your lag measures. While a lag measure tells you if you’ve achieved your goal, a lead measure tells you if you are likely to achieve the goal. While it is hard to do anything about a lag measure, a lead measure is within your control. For example, while you can’t control how often your car breaks down on the road (a lag measure) you can certainly control how often your car receives routine maintenance (a lead measure). And, the more you act on the lead measure, the more likely you are to avoid that roadside breakdown lag measure. Conventional wisdom states that you should keep your eye on the lag measures (like loan production). The third breakthrough behavior, however, states that you should focus on moving the lead measures. These are the high leverage actions which cause the lag measure to move. In Chapter Two: Measures the Metrics That Matter, we identified various lead and lag measures for both retail and commercial sales. Figure 1.0 illustrates the retail Metrics That Matter .

Retail Sales Metrics That Matter

A = B x C - D

Net New Accounts

Closed Accounts

# F:F Meetings

Sales Conversion Ratio

Walk-In | Walk-Over | Appointments o # of Walk-Overs/Week o # of F:F Meetings/Day/FTE

(Win/Loss) x (Cross-Sell) x (90 Day Retention Rate) o Branch Sales Velocity o Total New Accounts Opened/Day/FTE o Total New Accounts Opened

o # of Service-Related Conversations/Day o Service/Sales Conversion Ratio

Figure 1.0 The Retail Metrics That Matter

© 2019, Ron Buck

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In Figure 1.0, Net New Accounts (or New Loans) (A) is the lag measure. This is the result you are trying to achieve. We call them lag measures because by the time you get the data, the result has already happened, therefore they are always lagging. (B), (C) and (D) are all lead measures. Lead measures are different because they foretell the result. They have two primary characteristics. First, a lead measure is predictive, meaning that if the lead measure changes, you can predict that the lag measure will also change. Second, a lead measure is influenceable , meaning it can be directly influenced by the sales team. Figure 2.0 illustrates the commercial (or business banking) Metrics That Matter that were revealed and discussed in Part Two.

Commercial Sales Metrics That Matter

Sales

= A x B x C

Velocity

D

Win/Loss Ratio

o Stage Probability To Close o Stage Attrition Rates o Stage Conversion Rates

# of Sales Ready Opportunities

Average Time-To-Close

o # of New Prospects o # of Prospects Working

o Average-Time-In-Stage

o Prospect Conversion Ratio o # of Client Opportunities o Client Opportunity Conversion Ratio

Average Deal Size o New Accounts/Loan

Figure 2.0 The Commercial Metrics That Matter

The lag measure (new $loans/quarter) or Sales Velocity measures the goal. It is a lag measure. (A), (B), (C) and (D) are lead measures. They are predictive (measuring something that leads to the goal), and they are influenceable (something we can influence). With the third breakthrough behavior, you act on lead measures, the movement of which will become the driving force for achieving your Few Important Goals.

© 2019, Ron Buck

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Let’s explore the two characteristics of a good lead measure by assuming you have an important goal to increase your quarterly loan production from $100 million/quarter to $150 million/quarter by the end of 2014. The ‘X to Y by when’ of loan production is your lag measure. You know that the economy is an important factor in loan production, so the health of your local economy can be predictive of your loan production. But is your local economy a good lead measure? No, because your sales team cannot influence the economy. The economy is predictive, but it is not influenceable. The economy fails the test because both characteristics are equally important. Other measures, such as (A) (# of sales ready opportunities), (B) (average deal size), (C) (win/loss ratio) and (D) (average time-to-close), however, easily pass the test by being both predictive and influenceable. Increasing (A), (B) or (C) by 20% will increase your sales velocity by 20%. However, increasing (D) (average time-to-close) by 20% increases sales velocity by 25%. At the same time, (D) also increases (C) (win/loss ratio) by 20% - together increasing sales velocity by 50%. That is, to increase quarterly loan production from $100 Million/quarter to $150 Million/quarter can be accomplished by reducing your average time-to-close by 20% (say from 90 days to 72 days). Reducing your average time-to-close provides the most leverage on sales velocity. Now that you have identified the right lever, you must select the activities you believe have the greatest impact on your average-time-to-close. Acting on your average time-to-close (D) is what the third breakthrough behavior is all about. Reducing (D) from 90 days to 72 days by the end of 2013 requires you to analyze each stage of your sales pipeline and understand the conversion rates of each stage. There are a number of places a deal can become stalled, causing prospects to withdraw from the process. Does it take too long to qualify a sales ready opportunity (gathering financials, vetting, issuing a term sheet)? Does it take too long to underwrite the deal? Or is it taking too long to close a deal? The answer will identify the activities that will have the greatest impact on your average time-to-close and on your important goal. Lead Measures Can Be Counterintuitive Most sales leaders have spent their entire career focusing on lag measures even though they have not been able to directly influence them. There are two reasons almost all sales leaders do this. First, lag measures are the measure of success and the results they have to achieve. Second, data on lag measures is almost always much easier to obtain and more visible than data on lead measures.

© 2019, Ron Buck

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Most people are tempted to over-simplify this breakthrough behavior. If you are thinking something like “so, all you are saying is that if you want to lose weight (lag measure), you should focus on diet and exercise (lead measures)? What is so revolutionary about that?” then you have missed the point of the Third Breakthrough Behavior. There is a huge difference between merely understanding the importance of diet and exercise and measuring how many calories you have eaten and how many you have burned while exercising. In the end, it is the data on lead measures (displayed in scorecards) that makes the difference, that enables you to close the gap between what you know your team should do and what they are actually doing. Without lead measures, you are left to try to manage to the lag measures, an approach that seldom produces significant results. The Key Principle Behind Lead Measures Is Leverage. Think of it this way: achieving your few important goals is like trying to move a giant rock. Despite all the energy your sales team exerts, it doesn’t move. It is not a question of effort. If it was simply about effort, you and your teamwould already have moved that rock. The problem is that effort alone is not enough. Lead measures act like a lever, making it possible to move that rock. Consider the two primary characteristics of a lever. First, unlike the rock, the lever is something you can move – it is influenceable. Second, when the lever moves, the rock moves – it is predictive.

Predictive

Lag Measure

Influeneable

Influenceable

A Lever Enables You To Do More Work Using Less Effort

© 2019, Ron Buck

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How do you choose the right levers? To achieve a goal you have never achieved before, you must do things you have never done before. Look around. Who else has achieved this goal or something like it? What did they do differently? Analyze your sales process and carefully decide how to improve it. Then select the few activities that will have the most impact on the lead measure. In our previous example, we could see that reducing the average time-to-close by 20% from 92 days to 72 days will increase sales velocity from $100 Million/quarter to $150 Million/quarter (50%).

Lag Measure

$150 Million/Quarter

90 Days

LEVER (Average Time-to-Close)

$100 Million/Quarter

72 Days

Reducing (D) (Average Time-to-Close) by 20% Increases Sales Velocity by 50%

Selecting the activities that will have the greatest impact on your lead measures requires a breakthrough behavior that will be discussed in Part Four: Develop Action Plans. Conclusion Acting on the lead measures is a paradigm shift. It requires a new sales discipline of execution. However, by acting on the lead measures, all your sales efforts become more effective. The third breakthrough behavior is about applying disproportionate energy to the activities that drive your lead measures. This provides the leverage for achieving the lag measures. It is Leverage that allows your team to do things they have never been able to accomplish in the past - with less effort.

© 2019, Ron Buck

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IV. The Fourth Breakthrough Behavior Keep A Compelling Scorecard

© 2019, Ron Buck

Six Breakthrough Behaviors of High Performers 31

Keep A Compelling Scorecard The fourth breakthrough behavior is to keep a compelling scorecard and make sure everyone knows the score at all times so that they can tell whether or not they are winning or losing. This is the discipline of engagement. Remember, people play differently and become more engaged when they are keeping score. The difference in performance between a team that simply understands their lead and lag measures as a concept and a team that actually knows their score is remarkable. If the lead and lag measures are not captured in a visual (and compelling) scorecard that is updated regularly, they will disappear in all the daily distractions. Simply put, people and teams disengage when they don’t know the score. When they can see at a glance whether or not they are winning, they become engaged. Great teams know at every moment whether they are winning or losing. They must know, otherwise they don’t know what they have to do to win. A great team can’t function without a scorecard that compels action. Without it, energy dissipates, intensity lags, and the team goes back to business as usual. Visually displaying data is not new to you or your team. In fact, you may be thinking that you already have a scorecard, or even lots of scorecards, all captured in complex spreadsheets inside your computer systems. And the data just keeps coming in. Most of the data is in the form of lag measures accompanied by historical trends, forward projections, and detailed financial analysis. But what we are after in the fourth breakthrough behavior is quite different. When implementing this breakthrough behavior, your organization needs to build sales scorecards that are designed to engage the frontline sales people and help them pinpoint the one or two lead measures that they need to act on that will have the most impact on your sales goals. The fundamental purpose of a scorecard is to motivate your team to win and to help them understand what to do to win. High performing organizations use scorecards to engage their employees. At any moment, high performers can see if they are winning and what to do move the organization to a higher level of performance.

© 2019, Ron Buck

Six Breakthrough Behaviors of High Performers 32

Winning or losing requires you and your team to know three things: where you are now, where you should be now, and what you need to do to achieve your goals. In this regard, a compelling scorecard is both a roadmap and a diagnostic tool for course-correction and performance improvement.

Retail Sales Metrics That Matter

A = B x C - D

Net New Accounts

Closed Accounts

# F:F Meetings

Sales Conversion Ratio

Walk-In | Walk-Over | Appointments o # of Walk-Overs/Week o # of F:F Meetings/Day/FTE

(Win/Loss) x (Cross-Sell) x (90 Day Retention Rate) o Branch Sales Velocity o Total New Accounts Opened/Day/FTE o Total New Accounts Opened

o # of Service-Related Conversations/Day o Service/Sales Conversion Ratio

Figure 1.0 The Retail Sales Metrics That Matter

Figure 1.0 illustrates the retail sale metrics that matter. As shown in Figure 1.0, # of F:F Meetings is the sum of three things: (1) Walk-in opportunities; (2) Teller walk-over referrals; and (3) Appointments kept from leads, alerts and referral calls. (B) X (C) equals the total new accounts opened during a specific period of time. The sales conversion ratio (C) is the product of your win/loss ratio, cross-sell ratio and 90 day retention rate.

© 2019, Ron Buck

Six Breakthrough Behaviors of High Performers 33

Figure 2.0 A Typical Retail Sales Process

Figure 2.0 illustrates a typical retail sales process. The process has three segments (1) outbound calling (2) a face-to-face needs assessment and sales process (3) on-boarding. Every bank places more or less emphasis on each segment of this sales process based on their current priorities. A documented sales process enables and sustains the cultural change necessary for success. The documented sales process establishes your language, lexicon and reveals all your important lead measures. A documented sales process and glossary are the prerequisites for compelling scorecard designs.

© 2019, Ron Buck

Six Breakthrough Behaviors of High Performers 34

Best Practice Scorecard Design Rules We have learned the following best practice scorecard design rules from our research at over 370 banks. Over the past decade we have gathered their sales data each month, provided scorecards for them, and interviewed thousands of their personal bankers, sales managers, business and commercial bankers and sales executives at every level of the organization. A Compelling Scorecard:  Is Visually Simple – You can tell instantly if you are winning or losing.  Displays The Few Metrics That Matter With A Few Supporting Activity Measures.  Puts Your Performance in Context of Your Goals, Peers, Top 20%, and Time – this is a must!  Cascades (Rolls-Up) From The Bottom To The Top Of Your Organization.  Displays Activity, Lead and Lag Measures Together In Logical Format.  Must Help Identify High Priority KPIs.  Comes With A Glossary For Both Lead and Lag Measures.  Has Intuitive Navigation To Linked Reports That Contain More Detailed and Supporting Information.  Incorporates Scorecard Math that Works.

© 2019, Ron Buck

Six Breakthrough Behaviors of High Performers 35

Figure 3.0 Retail Scorecard

Figure 3.0 illustrates a retail scorecard of high performing banks. All scorecard design best practices are included. It displays the Metrics That Matter in a visually simple format – allowing your team to instantly tell where they are in respect to their goals, peers and the top performers. We call this performance in-context. Context reveals answers. Without context your team will have no perspective on how well they are doing and become disengaged. Each KPI is linked to a detailed report that provides much more detail. Lead and lag measures are shown together in a logical manner. The Scorecard is updated weekly and accurately. The scorecard math (see Figure 1.0) links the lead and lag measures. The scorecard is accurately cascaded from the personal banker to branch manager to market/regional executive to the CEO. Activity measures, lead measures (KPIs) and lag measures are all displayed together in a logical manner that can be quickly observed by everyone on your team. A glossary (definition of terms, stages, and measures) should be developed before your scorecards are designed so everyone is clear about the meaning of each metric. The glossary contains a clear definition of the metric with precise formulas to calculate them.

© 2019, Ron Buck

Six Breakthrough Behaviors of High Performers 36

Individual Quarterly Action Plan Scorecard

You Have Closed

Your Goal

Gap-To-Goal

New Accounts

Average $/Account

$ 264,744 $ 374,176 $ 96,000

$ 250,000 $ 350,000

106% 107% 100%

36 32 12

$ 7,354 $11,693 $ 7,011

Consumer Deposits Consumer Loans Consumer Checking

7.9

Lag Measure : From 3 To 4 By End of Q3

Total # of New Accounts/Day

6.1

5.5

5.0

3.5

3.0

Your Goal

4.0

Q1 2013

Q2 2013

Q3 2013

S/S Conversion Ratio

Lead Measure: High Priority KPI #1 : From 6 To 8 By End of Q3  Focus : Increase Teller Walk-Overs  From 0.5 to 1.0 per week by end of Q3  Focus : Improve Service/Sales Conversion Ratio  From 1% to 5% by end of Q3

B: Total # of New F:F Meetings/Day

9.6

Your Actual Your Goal Your Peers

4.8% 5.0% 4.55%

9.0

9.5

8.1

6.0

7.6

Your Goal

8.0

Top 20%

7.1%

Q1 2013

Q2 2013

Q3 2013

Cross-Sell Ratio

C: Sales Conversion Ratio

Lead Measure : High Priority KPI #2 : From 30% to 50% By End of Q3  Focus : Increase Cross-Sell Ratio  From 1.15 to 1.6 by end of Q3

Your Actual Your Goal Your Peers

1.71 1.60 1.55 1.79

66%

Your Actual Your Goal Your Peers Top 20%

50%

62%

Top 20%

84%

Figure 4.0 Retail Individual Quarterly Action Plan Scorecard

Figure 4.0 is an individual scorecard associated with a quarterly action plan. This scorecard is focused and compelling. It illustrates how the high priority KPIs (lead measures) are impacting the lag measure goals (from X to Y by when). This scorecard is simple (without a lot of metrics) allowing individuals and teams to instantly tell if they are winning or losing – and what to do to make course-corrections or to accelerate performance. This important scorecard is linked to reports that provide more details on each metric and it is linked to a Quarterly Action Plan that will be discussed in the next part of this series -The Fifth Breakthrough Behavior: Develop Action Plans. The individual (or team) quarterly action plan scorecard (and the associated quarterly action plan) is an important coaching tool. The engagement that you get from your employees when you begin to use these scorecards will not be subtle. It will be palpable.

© 2019, Ron Buck

Six Breakthrough Behaviors of High Performers 37

Engagement Many believe that engagement drives results, and so do we. However, we now know that results drive engagement. In 1968, the Harvard Business Review published an article titled: “One More Time: How Do You Motivate Employees?” In it, they emphasized the powerful connection between results and engagement. In 2012, they published another article, “The Power of Small Wins”. In the article, the authors state, “The power of progress is fundamental to human nature, but few sales managers understand it or know how to leverage progress to boost motivation.” We have learned that compelling scorecards can be a powerful tool to engage employees. Compelling scorecards not only drive results but use the visible power of progress to instill the mindset of winning.

Commercial Sales Metrics That Matter

Sales

= A x B x C

Velocity

D

Win/Loss Ratio

o Stage Probability To Close o Stage Attrition Rates o Stage Conversion Rates

# of Sales Ready Opportunities

Average Time-To-Close

o # of New Prospects o # of Prospects Working

o Average-Time-In-Stage

o Prospect Conversion Ratio o # of Client Opportunities o Client Opportunity Conversion Ratio

Average Deal Size o New Accounts/Loan

Figure 5.0 Commercial/Business Banker Metrics That Matter

Figure 5.0 illustrates the commercial (and business banking) Metrics That Matter . Sales velocity is a simple equation to compute your sales per month or revenue per quarter or loan production per month. It is a function of (A) number of new sales ready opportunities; (B) average deal size; (C) win/loss ratio; and (D) average-time-to-close. Sales velocity can be increased by 20% by increasing (A), (B) or (C) by 20%. However, increasing (D) by 20% will increase sales velocity by 25%.

© 2019, Ron Buck

Six Breakthrough Behaviors of High Performers 38

High performing business bankers are very aware of these sales calculations. They are also aware that reducing average-time-to-close has the most impact on sales performance. In most cases, however, sales managers only focus on bringing more sales ready opportunities into the top of the pipeline and focus very little time on maximizing the value of those deals. This behavior is reinforced by sales managers whose primarily measure ‘sales activity’. They ask questions like “how many calls did you make this week?” or “how much did you add to your pipeline last month?” Alone, these questions drive very inefficient behavior. From a business banker’s perspective, in many ways, adding new opportunities to the pipeline is the easiest thing to do, particularly if that is how they are being measured. We have found that increasing the number of deals in the pipeline does not have a linear effect of deals won. We have found that less is more. Each business banker has a certain ‘pipeline capacity’ that will optimize sales performance. Typically, the business banker who manages a 3X (or less) pipeline usually has a 32% better close rate. Most business bankers have too many deals in their pipeline to maintain a winning close rate – and this is usually because they are being measured and coached toward this behavior. Our research also shows that (within typical boundaries) there is a linear relationship between D (average-time-to-close) and C (win/loss ratio). The combination of decreasing D and increasing C is what we call sales acceleration – which leads to rapid acceleration of deal flow. In most cases, reducing your average-time-to-close by 20% improves your win/loss ratio by 20% - together increasing your sales velocity by 50%. This is equivalent to reducing your average-time-to-close from 90 days to 72 days. This alone will improve sales velocity by 25% but when it is compounded (sales acceleration) by improving the win/loss ratio, sales velocity improves by 50%. For most business bankers, these are remarkable (almost unbelievable) numbers. But do the math yourself.

© 2019, Ron Buck

Six Breakthrough Behaviors of High Performers 39

Figure 6.0 A Typical Commercial/Business Banking Sales Process

Figure 6.0 illustrates a typical commercial lender or business banking sales process. A documented sales process enables and sustains the cultural change necessary for success. It establishes your language, lexicon and reveals all your important lead measures. A documented sales process and glossary are the prerequisites for compelling scorecard designs. The commercial/business banking sales process has three segments: Portfolio Management & Prospecting, The Sales Pipeline, and On Boarding. Portfolio management and on boarding are both part of your growth and retention strategies for your new and existing customers. Prospecting is your growth strategy for finding new customers. Prospecting includes finding new customers, getting an appointment to meet with them and conducting a discovery call.

© 2019, Ron Buck

Six Breakthrough Behaviors of High Performers 40

The sales pipeline has five distinct stages. It begins with a sales ready opportunity for a prospect or existing customer (a financial need has been discovered and the customer/prospect is willing to share financials.) The sales ready opportunity is then qualified (gathering financial information, spreading the deal and completing an initial risk rating, and vetting the deal with management to see if it is a deal to be pursued); then a solution is developed (underwriting, approvals and completing a commitment letter); the deal is presented and negotiated (the presentation call); and then closed (appraisals, etc.). Over the past decade we have been measuring and score-carding thousands of commercial lenders and business bankers. We have been able to extrapolate the following facts.  Winning sales cycles are shortening. High performing business banking teams have reduced the time from qualification to close by 23%, improving sales velocity by 60% and leaving average performers in their wake. They have done this by obsessively reducing their average-time-to-close.  Rushing through qualification lengthens the sales cycle . Intellectually, everyone understands this – but even very experienced business bankers forget the basics. Spending enough time in the early stages is crucial to managing the cycle and, yes, shortening the overall sales cycle. Our data suggests that if you spend considerably less time in the early stages of the pipeline, the latter stages drag out – directly impacting your win/loss ratio.  You will lose deals that are in the pipeline for more than 150% of the winning sales cycle duration (average-time-to-close). Based on our data, it is really important to understand the value of your ‘active pipeline’ as opposed to your ‘total pipeline’. Your ‘active pipeline’ does not include deals that are stalled or that have been in a stage longer than 150% of the winning sales cycles. Most business banking teams have a significant number of deals in the pipeline that are of little or no value. Deals that are languishing are usually deals that should be thrown-out or have already been lost. Working on these deals leaves less times to work on the deals that can be won.  Most winning sales cycles follow a predictable pattern. When you remove the exceptions at each extreme of the spectrum, the time it takes to move a winning deal through each stage of the sales cycle is fairly standard (and can be measured). Using historical data, high performers are able to manage their opportunities within the ‘Win Zone’ and generate alerts when they enter the ‘Stall Zone’. Excluding outliers, all deals fail when they stay in a given stage 150% longer than the ‘Win Zone’.

© 2019, Ron Buck

Six Breakthrough Behaviors of High Performers 41

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