The fallout from the global financial crisis (GFC) had stronger ramifications for sales process in Europe than for the U.S. The Retail Distribution Review (RDR) was one of the formal programs of the Financial Services Authority (FSA) in the UK and one of its five key tenets was to remove the commission bias from the system so that recommendations made by advisers are not influenced by product providers. Commission bias is the term used to describe how compensation may affect which products a financial advisor suggests to a client.Front-Line Sales Managers

More generally, the perceptions of financial services consumers resulted in “variable sales compensation” becoming a dirty phrase in the industry. There are still commissions, fees and rebates for selling products, but there is much greater transparency. Compensation is negotiated by the adviser. The product provider has less ability to influence the sale through sales compensation.

You can argue over whether such an approach benefits the customer or not. This article in the Financial Times argues that the RDR may not lead to cheaper fees. To the credit of the FSA, the RDR was not strictly about cheaper fees – it was about better outcomes for consumers in terms of purchasing the right products based on their individual situations. Better outcomes for customers are an admirable objective, as long as the outcomes remain cost-effective and regulation does not inhibit the product providers’ capability to innovate and ensure better standards, products and service over the long term.

This has implications for internal operations and sales management. They can no longer simply throw sales compensation fuel on the revenue fire to achieve revenue objectives Financial services organizations in Europe, from investment management to insurance, need alternative ways to retain top revenue producers and drive behavior that drives revenue. Two big investment themes for financial services organizations in Europe are:

  1. Digital Services
      (a) Make it easier for agents and customers to do business with institutions, leading to more new business, retaining existing customers and cross-selling additional services.
  2. Performance Reporting
      (a) Use detailed analytics to create feedback loops, so that management can address performance issues.

Digital services is a topic well covered by the industry, both in terms of media attention and investment. There has been very limited progress in performance reporting. For most organizations, performance reporting relies on data captured in transactional systems. I've seen financial service companies systematically link initial needs analysis interactions to sales transaction systems, producing comprehensive analytics on outcomes. Front-line sales managers (FSM) are then given the analytics, and can use them to coach their teams to improve performance, but what happens next? And what happens when system analytics are reviewed after a period of time to see if there has been improvement?

This is the missing link for financial services. Effective front-lines management shouldn't be magic – it should be data-driven if it is to be effective. How do sales organizations measure the activity of FSMs? How do they help FSMs to be more effective as sales coaches?

The Sales Executive Council (SEC) did a fantastic piece of research that resulted in a very popular book, The Challenger Sale. The SEC noted that a big flaw in many coaching approaches is that they are outcome-based. Every sales person is unique and should be measured in terms of competencies, skills, knowledge and methodology. To effectively coach salespeople, you need to know more than just how many calls they made, how many opportunities they have, how big is their pipeline. You need to observe and measure the quality of the activity. Do they need to improve their knowledge, their skills, their competencies, their adoption and mastery of methodology? You need to know what is needed for each sales person and the FSMs need to coach to that. This is how you shift the middle 80 percent of your sales organization who are B players.

FSMs need to observe their team, coach to the individuals’ DNA and set short-term, relevant objectives on what they personally need to do to improve their performance and outcomes. The SEC research found that organizations with effective FSMs demonstrated a 17 percent increase in quota attainment.

FSMs coach their teams with varying degrees of effectiveness. Coaching without a defined sales process to coach to is a waste of time, so let us brazenly assume your organization has a sales process. The challenge is that most organizations do not measure coaching activity in real-time. They rely on spreadsheets, collating the data every 3 to 12 months. Coaching data becomes another lagging indicator, and most organizations have no way of coaching the coach (the FSM) to be more effective and improve the coach’s performance. If your organization is relying solely on systematic data, you’re trying to coach to the outcome and not to the process. This is like trying to tell Tiger Woods to get the ball in the hole, without providing any tailored swing advice, course management or match observations. Coaching to outcomes is not truly influencing your sales person’s competencies, skills, knowledge or methodology.

To turn coaching data into real-time actionable insight and leading indicators, financial services organizations in Europe should be investing in mobile, point-of-need coaching technology to capture coaching interactions, call observations, field observations and personal objective setting in real-time. Coaching technology not only captures the data, it makes it easier to capture the data, saving FSMs from having to transfer written notes from notepad to spreadsheet to email. Coaching analytics should be delivered alongside transactional analytics to executives and senior management to provide a complete view of leading and lagging indicators. Imagine being able to correlate sales competencies with sales outcomes. When executives and senior management have visibility of coaching data, they can then give the support to the FSMs that they need to be more effective and coach their sales teams to higher sales performance.

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