Top Three Reasons IT Staffing Firms Stagnate
Over the course of the past several months I have been doing less sales training and more "business consulting." More to the point, clients are sharing with me their challenges in growing their business. Owners of IT staffing firms are reaching the $5M, $10M or $25M+ plateau but can't seem to break through the ceiling and scale their business beyond these milestones. Below I share the three common denominators that inhibit the growth of IT staffing firms.
Inhibitor To Growth-Leadership Extremes
Often when I begin working with a new client I often see leadership that either tries to “do it all,” or they’re extremely “hands off.” Let me try to explain.
With a couple of rare exceptions, just about all IT Staffing firms I have worked for (or consulted with) struggle with the challenge of holding people accountable. Especially on a consistent basis. When people are not held accountable, “settling” for second place and mediocrity become acceptable. And if the behavior (of not being held accountable) goes on long enough, it becomes the culture of your organization. But the lack of accountability often begins with unclear or poorly defined performance expectations. If leadership for example has not clearly defined and clearly communicated for sales people what sales goals and quota is expected of them than the expectations have not been clearly established. Thus you have no standard or expectations in which to hold someone accountable to. I know this sounds like really basic stuff but most sales people I talk with are not clear on what specific performance criteria is expected of them. If you are a manager, when is the last time you met with your team members to discuss this stuff? How often do you discuss performance management with your team and in what level of detail? Are action items clearly defined from those meetings? Most importantly, is follow up conducted on the results of those action items? Just like you have to tell your children to look both ways before they cross the street more than once before they understand it, this is a conversation you have to have on a weekly basis in your one-on-one meetings. You should know the details of why every deal closes and doesn’t close so that you can coach and develop your people. And hold them accountable. When people fail to hold themselves (or others) accountable they fail to pay attention to the results. This is by far the most common challenge that I see IT staffing firms struggle with when it comes to growing their organization. And it happens at all levels within the organization. Business owners need to do the same with their sales managers/branch managers/directors.
“Do It All Leadership”
The other “leadership extreme” I see is leaders who do it all. When I say “Do It All Leadership” I am referring to the sales superstars who got promoted to run a branch, local, regional or national sales team or who started their own IT staffing firm. I know this because I was one myself. These are the sales superstars who know how to get things done. They’re good! The problem with this type of leadership is that you can’t scale and grow your business this way. It doesn’t matter how great of a sales person you are, one person can only bring in so much revenue , close so many deals and work so many hours. In order to scale your company you have to develop your people. You have to groom them to become what you already are. The common shortfall I see here is sales leaders trying to “lead from behind their desk.” What I mean by that is they have sales reps on their team that they know will not meet their sales quota. The way they address it is by selling more themselves to make up for the short fall. Instead, what I suggest these leaders should be doing is getting out from behind their desk and working at the desk level with their sales reps and teaching them everything they know that made them successful. Only when you develop your people can you truly begin to scale and grow your business.
I know, I know, this one seems a little bias coming from the owner of a sales training organization. The simple reality is that most (80%) IT staffing firms don’t have a formal employee training program in place for new hires. And forget about offering ongoing training for employees who have been with the company for over 1 year. I have yet to see such a program (if you are out there we would love to hear from you)! But for those who do offer new hire training, they most likely don’t have an effective program in place. The most common training program I see (and most ineffective) is “shadowing.” You know this one. Your new employee starts on Monday and reads documentation on the company history, policies and procedures. The remainder of the week they “shadow” other employees while they perform their daily tasks. Six months later the leader is frustrated with their new sales rep because they have yet to “hit the ground running and be productive.” How did that “shadowing” training session help the new sales rep overcome the objection of “we’re happy with our current IT suppliers?" Or the "send us your information and if we need you we will call you?” And how did it teach the new sales rep how to select and qualify accounts? It didn’t accomplish either of those goals. Just look at how much our industry has changed over the past few years. The sales process has gotten far more complex. Customers want to be engaged differently than they did just a few years ago. The competitive landscape has dramatically shifted. Does your training program address these changes and account for these new sales challenges? Or, are you selling the same way and taking the same message to the marketplace as you were when you opened your doors? Does your training program include solutions on how to overcome the never ending challenges that your sales and recruiting team face on a daily basis? When is the last time you listened to one of your recruiters or sales reps on the phone with a prospect? Have you listened to them try to overcome an objection recently? Close a deal? Try it, you will be amazed at what you hear. The key to growth is the quality of the dialogue among your sales and recruiting team. They're the engine. Customers who purchase and consume IT staffing services have gotten much more sophisticated in recent years on how they select their vendors. What have you done with your sales strategy and approach to keep up with these changes? How are you teaching this to your team? How do you know it’s working?
Inhibitor To Growth-No Formal Sales Process or Methodology
In our workshops I often refer to the sales process in our industry as a long random sequence of events. Typically when I ask a sales rep (or recruiter) what needs to happen or what is going to happen next in the sales cycle to move closer to a closed a deal I often get responses that begin like this. “I think….” “Maybe….” “I’m waiting to hear back…..” My point being that sales professionals often operate under “wishy-washy” expectations with their customers (recruiters do the same with their candidates). There is no clear expectation set between the client and the sales professional or the recruiter and the candidate. The result is a stalled or delayed sales cycle that usually results in no sale. No wonder the average sales closure rate for the industry is between 28%-33%! If you worked for Oracle or any other major high-tech firm and your sales closure rate was 33% you would be fired. In the IT staffing industry we often think (assume) that the sales process is 1.) get job requirement, 2.) source candidates,3.) interview candidates, 4.) conduct reference checks and 5.) get offer from client. The reality is so much more goes on and so much more needs to happen in order to close a deal. What sales (and recruiters) need is a repeatable process or a sales “playbook” of what steps must be completed and how to complete each step in the sales cycle. They need to have certain deliverables or milestones defined in their customer's purchasing process that signify one step closer to a closed deal (think sales funnel). And if they can manage or be managed to following this process they can close a significantly higher percentage of their requirements (and avoid all the wasted man hours and frustration of working on job orders that are not qualified or realistic). Not only that, sales professionals and sales leaders can then begin to have some predictability into their sales funnel. And that takes me to my last point. How do you define your sales funnel? What makes a deal 80% closeable vs. a deal that is 40% closeable? How are you defining the stages of your sales funnel? I hope it’s not based on steps 1-5 listed above.
If you think about it, this third point-no formal sales process or methodology-brings everything full circle. Leadership is needed to properly define the sales process including the milestones. Leadership also needs to manage their sales reps (and recruiters) to hitting those deliverables in the sales cycle (vs. just asking for an update and getting a wish-washy response from the rep). Employee training is needed to coach and develop your sales reps and recruiters on how to navigate the sales cycle and overcome the hurdles that are associated with each phase of the sales cycle. When you start executing on these tasks on a consistent basis, you can expect to see your firm achieve the growth you’ve always hoped for.
About Dan Fisher
Dan Fisher is founder and owner of Menemsha Group, a provider of sales enablement solutions dedicated to helping IT staffing firms improve win rates, shorten their sales cycle, and increase revenue per sales rep. Since launching Menemsha Group in 2008, Dan has consulted with over 200 IT staffing firms and has invested over 5000 hours coaching IT staffing sales reps. He’s authored is his own proprietary sales methodology and has previously spoken at Staffing World, TechServe Alliance and Bullhorn Live 2012. Prior to launching Menemsha Group, Dan spent 16 years in the IT industry running local, regional and national sales teams. Dan worked for Kelly Services, Oracle Corporation and Alliance Consulting. Dan currently resides in Boston, Ma.