Improving Sales Force Performance and Effectiveness
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Improving Sales Force Performance and Effectiveness

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L.E.K. Managing Director Chris Kenney spoke at a Chief Executive Network event on improving sales force performance and effectiveness. See his presentation here.

L.E.K. Managing Director Chris Kenney spoke at a Chief Executive Network event on improving sales force performance and effectiveness. See his presentation here.

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Improving Sales Force Performance and Effectiveness Presentation Transcript

  • 1. Bangkok Beijing Boston Chennai Chicago London Los Angeles Improving Sales Force Performance Melbourne November 21, 2013 Mumbai Milan Munich New Delhi New York The materials contained in this document are intended to supplement a discussion between Chief Executive Network and L.E.K. Consulting on November 21, 2013. These perspectives are confidential and will only be meaningful to those in attendance. Paris São Paolo San Francisco Seoul Shanghai Singapore L.E.K. Consulting llc, One North Wacker Drive, 39th Floor, Chicago, IL 60606, USA T: 312.913.6400 F: 312.782.4583 www.lek.com Sydney Tokyo Wroclaw © 2013 L.E.K. Consulting LLC. All rights reserved.
  • 2. Agenda Agenda  Introduction to L.E.K. Consulting  Key selling effectiveness pain points  Critical levers for sales force effectiveness  Closing statements 2 CONFIDENTIAL © 2013 L.E.K. Consulting LLC. All rights reserved.
  • 3. Key selling effectiveness pain points Common Sales Force Challenges: Sales Strategy & Channel Alignment  Prioritization of target markets  Difficulty in articulating a company’s value proposition New Lead Generation Sales Conversion Customer Retention  Low sales pipeline / chasing the wrong leads  Low win rates  Internal support break downs (e.g., slow response to customers, operational handoffs, etc.)  Customer or star sales performer defections  Poor account management – lost opportunities to grow share Sales Force Enablers: Sales Organization & Management Performance Measurement Systems & Tools Sales Force Performance Culture Source: CSO Insights, L.E.K. Consulting 3 CONFIDENTIAL © 2013 L.E.K. Consulting LLC. All rights reserved.
  • 4. Key selling effectiveness pain points Demographics of survey respondents n=48 Percent of respondents 100 90 Other* Consumer Products 80 Hospitality & Food Service HR manager / director >1,000 Marketing manager / director 500-999 70 Sales manager / director 60 50 40 100-499 Manufacturing 30 Senior executive (e.g., VP Sales) 20 50-99 10 <50 0 Industry Title Number of employees Note: *Other includes transportation, technology, healthcare, consulting & professional services and others 4 CONFIDENTIAL © 2013 L.E.K. Consulting LLC. All rights reserved.
  • 5. Key selling effectiveness pain points Review of our survey results (I of III) Selling Process Percent of Respondents rating 6 or 7* We clearly understand our customers’ issues before we propose a solution 44% Sales and Marketing are aligned in what our customers want and need 40% We have a formalized value proposition that is very compelling to our prospects 33% We always review the results of our solution with strategic accounts 29% Our sales pipeline is clearly aligned with our sales priorities - we are not chasing the wrong sales opportunities 21% 0 10 20 30 40 Note: *Please rate your level of agreement with each of the following statements on a scale of 1 to 7, where 1= strongly disagree and 7= strongly agree 5 50 CONFIDENTIAL © 2013 L.E.K. Consulting LLC. All rights reserved.
  • 6. Key selling effectiveness pain points Review of our survey results (II of III) People & Organization Percent of Respondents rating 6 or 7* We know why our top performers are successful 48% Our management team is highly effective in helping our sales team advance sales opportunities 38% Our organization is highly effective in allocating the right resources to pursue large deals 31% Our sales team focuses most of their time on actual selling activity rather than non-sales activities such as administration and customer service 21% We leverage the best practices of our top performers to improve everyone else 19% 0 10 20 30 Note: *Please rate your level of agreement with each of the following statements on a scale of 1 to 7, where 1= strongly disagree and 7= strongly agree 6 40 50 CONFIDENTIAL © 2013 L.E.K. Consulting LLC. All rights reserved.
  • 7. Key selling effectiveness pain points Review of our survey results (III of III) Systems & Metrics Percent of Respondents rating 6 or 7* Our sales compensation policies are aligned with our business objectives 35% Specific criteria have been established to define a strategic account in our company 29% Our sales management team is highly confident in the data available from our CRM system 19% In an average week, our sales force definitely spends sufficient time with customers 19% 0 10 20 30 Note: *Please rate your level of agreement with each of the following statements on a scale of 1 to 7, where 1= strongly disagree and 7= strongly agree 7 40 50 CONFIDENTIAL © 2013 L.E.K. Consulting LLC. All rights reserved.
  • 8. Critical levers for sales force effectiveness A holistic view of the sales function is necessary in order to identify and capture sustainable performance improvement opportunities 1 Sales Strategy Definition Sales Strategy & Channel Alignment Key  Market strategy Sales  Sales-led Areas growth strategy  Channel alignment and growth strategy 2 Sales Process and Management Improvements New Lead Generation Customer Retention Sales Conversion  Content marketing  Solution sales & program focus (incl. ROI/TCO)  Account planning  Lead generation and qualification  Proposal and pricing  Account maintenance  Pipeline management & forecasting  Negotiation and closing  Customer upsell  Customer and  Win-back channel value proposition  Innovation 3 Sales Sales Organization & Management (incl. sales ops and comp) Force Performance Measurement Enablers Systems & Tools Sales Force Performance Culture 8 CONFIDENTIAL © 2013 L.E.K. Consulting LLC. All rights reserved.
  • 9. Critical levers for sales force effectiveness 1 Sales Strategy Definition: Companies often face challenges prioritizing target markets and optimizing resources to penetrate them Common Challenges Key Questions to Consider  Lack of understanding of target markets, customer needs and competitive differentiation  Can management demonstrate an in-depth understanding of its target market segments and how it best meets customer needs?  Opportunistic sales  How much time do Sales Reps spend on core markets vs. opportunistic sales?  Lack of understanding of sales drivers  Misaligned resources  Changing market dynamics that lead to conflicts between the company and its channel partners  Difficulty in articulating a company’s unique selling proposition  Can management demonstrate the ROI from sales team investments on growth and profitability?  Do growth and Sales plans reflect this prioritization?  Has the company’s share of key channel partners deteriorated? Have channel partners shifted their alliances?  How clear is the value proposition? Can sales, channel reps and key supporting team members clearly and consistently explain it? 9 CONFIDENTIAL © 2013 L.E.K. Consulting LLC. All rights reserved.
  • 10. Critical levers for sales force effectiveness It is critical to have the sales model in place that best reflects the basis of competition and aligns with the strategy and value proposition Highly Differentiated Coverage Selling Model  Needs based Solution Selling Model  High touch selling and support (e.g., direct sales)  High touch selling and support (e.g., mix of direct and technical sales reps)  Unique needs based  Example: Pharmaceuticals Highly Commoditized Degree of Differentiation Sales Models: Degree of Differentiation vs. Product Complexity  Success requires ‘challenger sales’ versus relationship sales talent and focus Low Cost Coverage Selling Model  General needs based Mixed Coverage Selling Model  Needs based  Low touch selling and support (e.g., inside sales, partners, web, etc.)  Low touch selling and support (e.g., direct, inside sales, partners, web, etc.)  Example: MRO supplies  Example: Enterprise hardware Little / No Customization Not Technical High Customization Highly Technical Product / Service Complexity 10 CONFIDENTIAL © 2013 L.E.K. Consulting LLC. All rights reserved.
  • 11. Critical levers for sales force effectiveness 2 Sales Process and Management: Sales process and capability breakdowns may appear isolated and minor when viewed on an individual basis, but can have a significant aggregate impact Common Challenges  Sales training programs fall short in preparing sales reps to be effective in their roles  Sales and channel reps have trouble determining qualified leads  Informal allocation of qualified leads to sales regions or channel partners Key Questions to Consider  How varied is individual sales rep performance? How varied is individual channel performance?  Are reps pursuing opportunities that are misaligned with targeted sales?  Is there a real-time feedback loop from the Sales team on potential customer needs?  Are sales opportunities all treated equally?  Lack of formal customer feedback  A ‘one size fits all’ process to support sales reps complete proposals  Sales reps have limited authority to negotiate prices  Do customers complain about Sales Reps’ inability to make a timely decision on a request?  Is there a real-time feedback loop between Sales and Operations on order fulfillment and delivery?  Does the Sales team know which customers and customer segments drive sales and profits? 11 CONFIDENTIAL © 2013 L.E.K. Consulting LLC. All rights reserved.
  • 12. Critical levers for sales force effectiveness 3 Sales Force Enablers: High performing sales teams are structured to draw support from across the company to achieve sales goals Common Challenges  Channel marketing, development and management are out of alignment  Sales force structure, size and territory coverage are out of alignment  Cross-functional links are not strong between Sales and support functions  Performance/sales metrics and targets are not aligned with drivers  The sales force compensation plan is misaligned Highlighted on the next page  Sales operations/support do not provide the necessary leverage to the sales force  Culture does not effectively support sales performance and promote accountability Key Questions to Consider  Can management demonstrate the economics associated with the sales force model and current performance?  Do support functions view the sales function as a ‘customer’?  Do the sales performance measurement systems provide frequent, actionable feedback?  Does the sales force compensation plan reward Sales Reps and managers for the desired outcomes?  Can sales reps access the right information at the right time while selling and serving customers?  Are sales rep ‘stars’ celebrated? How are laggards supported to improve performance? 12 CONFIDENTIAL © 2013 L.E.K. Consulting LLC. All rights reserved.
  • 13. Critical levers for sales force effectiveness 3 The overall sales force compensation plan must align to the business strategy Guiding Principles for Administering a Sales Force Compensation Plan Sales Force Compensation Plan Design Elements  Keep the compensation plan simple; complex plans can be interpreted differently and lead to unwanted behaviors that were not foreseen when the plan was designed 1  Provide the sales force with a simple tool to use to calculate their anticipated compensation 2  Include sales management control provisions to adjust for windfalls, which can set unrealistic expectations and make the sale force uncompetitive in the long run  Include transition features in the sales force plan to account for new salespeople, key account changes or the launch of a new product  Make sure the data collection process and tools are in place to facilitate timely, accurate reporting 13 Level of Pay 3 Fixed vs. Variable Performance vs. Payout 4 Plan Administration CONFIDENTIAL © 2013 L.E.K. Consulting LLC. All rights reserved.
  • 14. Critical levers for sales force effectiveness In our experience, sales force effectiveness projects can quickly accelerate sales growth and profits Typical Benefits  Analysis and benchmarking of the sales function status quo vs. best practices in order to gain a clear view on the current situation  Identification of specific, actionable opportunities to drive sales performance improvements  An assessment of the potential financial gains that can be captured through sustainable improvements in the sales function  Detailed activation plan that prioritizes ‘quick wins’ to minimize project payback period and maximize ROI  Objective, independent perspective on the key success requirements, risks and internal change management issues to drive successful plan execution and benefit realization 14 CONFIDENTIAL © 2013 L.E.K. Consulting LLC. All rights reserved.
  • 15. Critical levers for sales force effectiveness A Business Process Outsourcing (BPO) company, was struggling with its sales force and needed to quickly turn around its performance to ensure its survival Company Situation  A BPO organization was experiencing significant problems with its sales force and its ability to generate revenue growth and retain customers. Specific issues included: – Declining market share – Operationally and internally focused organization – Mixed ability to articulate to customers its value proposition – Difficulty in cross-selling, up-selling, and targeted solution selling – Decentralized regional / country structure  The revenue growth pressures, combined with a significant debt load, put tremendous pressure on the company to turn around its performance quickly, but also on a long-term sustainable basis 15 CONFIDENTIAL © 2013 L.E.K. Consulting LLC. All rights reserved.
  • 16. Critical levers for sales force effectiveness Major workstreams centered around the design and implementation of necessary and dramatic changes in the company’s sales approach and organization Major Workstreams  Identified new opportunities to increase selling capacity without adding resources  Set up a Sales Transformation Office that defined work streams, mobilized teams and pushed out across the organization the right sales priorities for the business  Designed a new sales organization that better aligned with the company’s strategy and need to drive sustainable revenue growth  Renewed focus on growing the pipeline and improving win rates on new business / renewals 16 CONFIDENTIAL © 2013 L.E.K. Consulting LLC. All rights reserved.
  • 17. Critical levers for sales force effectiveness The company achieved early sales wins and established the right foundation for long-term sales performance improvement Results  Benefits included: – Increased senior management’s focus on the sales force and generating revenue growth – Grew the sales pipeline and increased the win rate for both existing and new customers – Brought on several new hires for key sales leadership roles – Began to turn around the culture to be much more customer centric and sales focused – Generated momentum to complete sales force transformation  Within three months of implementing the recommendations, the company experienced significant, measurable sales improvements – This included growth in the sales pipeline (up 50% y-o-y) and win rate (up 74% y-o-y) 17 CONFIDENTIAL © 2013 L.E.K. Consulting LLC. All rights reserved.
  • 18. Closing statements Closing statements:  The recovery is providing opportunities to reinvest in sales capabilities and areas that may have been constrained during the downturn  Companies should approach sales force effectiveness improvement as a cultural change to reinforce sales 18 CONFIDENTIAL © 2013 L.E.K. Consulting LLC. All rights reserved.
  • 19. L.E.K. Contacts Contact information Chris Kenney Managing Director T: 312.913.6409 c.kenney@lek.com L.E.K. Consulting One N. Wacker Drive Suite 3900 Chicago, IL 60638 19 CONFIDENTIAL © 2013 L.E.K. Consulting LLC. All rights reserved.