Designing the Customer-Focused Sales Organization

Designing the Customer-Focused Sales Organization Callidus TrueConnection October 13, 2008 Paul Reiman [email_address] (847) 442-3547 Rob Bentley [email_address] (847) 442-2673 To protect the confidential and proprietary information included in this material, it may not be disclosed or provided to any third parties without the approval of Hewitt Associates LLC .

Agenda

Introductions

Problem Statement

Solution Requirements

Five Step Process

Q&A

About Us

Senior Consultant, based in Lincolnshire, IL

~13 years w/ Hewitt

Insurance/financial services, consumer products, technology

Paul Rob

Senior Consultant, based in Lincolnshire, IL

1 year w/ Hewitt; ~10 yrs total

Technology, communications, media, retail, services

About You #1

Your Role

Sales Management or Sales Operations?

Human Resources or Finance?

Feeling left out because you were none of the above?

About You #2

Your Company

In a business that sells primarily to other business?

In a business that sells primarily to consumers?

In a business that is balanced across business and consumers?

Communications Services?

Technology?

Financial Services?

Feeling left out this time?

About You #3

Your Perception of the Economic Climate

This is a scary economic climate, and a time to be conservative in making changes to the sales force

This is a scary economic climate, which provides a unique opportunity to make changes in the sales force

The economy isn’t the issue… but still I’m inclined to be conservative at this time in making changes to the sales force

The economy isn’t an issue… and now is as good a time as any to be making changes to the sales force

The Question: Customer-Focused = Sales Performance?

Problem Statement

“ Sales Performance Management” often becomes “sell more”

Of course the business needs to demonstrate sales productivity, but this need must be balanced

If not properly balanced, dysfunctional sales behaviors and sub-optimal customer interactions can occur

Problem Statement continued

Ideal State: Aligning the Interests of Key Stakeholders Rewards and Career Development Performance and Productivity Sales Force Company Customers Aligned Selling and Service Process Customer Focused Sales Effectiveness Mutually Valuable, Magnetic Relationships

Solution Requirements: Aligning for Impact Performance and Rewards Talent Management Organization Design Effective and Efficient Right Talent, Right Job, Right Time Productive and Engaged Hewitt Sales Performance Model Align the Sales Force Customer Insight Business Strategies Value Proposition Market Dynamics Understand Business Drivers Internal Business Impact Satisfied, Loyal Customers – Resistant to Competitive Threats

Five Step Process  Know What the Customer Values  Translate Customer Values Into an Effective Coverage Model  Link Talent Management to Customer Value  Ensure Rewards Support Alignment  Track the Impact

Case Example Background: CleanMe Corp

Provider of health care sterilization capital equipment, consumable materials, and hand hygiene supplies

Part of a broader healthcare equipment and services company

Roots are in a certain type of sterilization in which buying the equipment required using the related consumable material

Historical expansion through both organic development and acquisitions, with more new products coming

Slowing growth across product lines

Declining sales force engagement

Case Example Background: FixItSoft

Provider of software that drives efficiencies in IT network management

Small unit within a well-known, global technology brand

Founded on and grew through a technology for communications networks, now re-centering into the broader enterprise business space

Recent acquisition of a IT service desk product line

Sales productivity trailing industry benchmarks and internal goals

Growth rate strong, but no faster than the market as a whole

Step 1: Know What the Customer Values  Translate Customer Values Into an Effective Coverage Model  Link Talent Management to Customer Value  Ensure Rewards Support Alignment  Track the Impact  Know What the Customer Values

Step 1: Three Sub-Steps

Define “the customer” and any segmentation that will affect the customer’s expectations of the sales force

Create a process to articulate the voice of the customer

Ask about what creates value for customers during their buying process, and how your performance compares to others

Who is the Customer?

For this purpose, define the “customer” as:

Any individual within an account who has a material impact on the decision to buy from you versus a competitor

As such, this may include:

True Economic Buyers

Influencers / Gatekeepers

Users / Technical Buyers

Segmenting the Customer Base

Key Questions:

Who buys our products/services in a different way?

Example: Federal Government vs. Large Businesses

Example: Telephone vs. Face-to-Face

Who uses our products/services in a different way?

Example: Home Office vs. Family/Entertainment

Who has a different type of relationship with us?

Example: New Accounts vs. Long-Standing Relationships

Example: Multi-Product vs. Single-Product

Gathering the Voice of the Customer

Buyer Role

Background

Know the Audience Determine Topics and Scale Develop Process

How: Media/Vehicles

When: Sampling and Frequency

Who: Use of Third-Party

Focus on Being Actionable

Make it Possible to Progress

Example: Customer Buying Value Matrix Relative Value in Purchasing Decision Relative Effectiveness Worse Than Other Providers Better Than Other Providers Less Value More Value Value Gaps to Monitor and Manage Comparative Advantage to Exploit Value Gaps to Address Comparative Advantage to Consider Leverage Providing access to solution experts Communicating the business value Articulating the future roadmap Responsiveness of sales resources Demonstrating features and functionality Understanding the solution requirements Providing a single integrated solution Providing a solution that integrates with my existing infrastructure Initial investment

New Insights: CleanMe Corp

The sales force was over-delivering in certain areas, and under-delivering in others – particularly in consumables

Relative Value in Purchasing Decision Relative Effectiveness Worse Than Other Providers Better Than Other Providers Less Value More Value Value Gaps to Monitor and Manage Comparative Advantage to Exploit Value Gaps to Address Comparative Advantage to Consider Leverage Solution Development New capital Replace Capital Consumable Planning / Management Planning / Management Solution Development Solution Development Features / Benefits Features / Benefits Features / Benefits Application Knowledge Planning / Management Contracting / Fulfillment Application Knowledge Application Knowledge

New Insights: FixItSoft Infrastructure Management Service Management Frequency

Pain-driven

Based on company size/growth

Consider replacing / upgrade every 3-5 years

Funding / Budgeting

Standard budget item

Specific projects owned below Officer level, allocated as needed

Appropriated in advance as an infrequent capital purchase

Owned at Officer level

Cycle

4-6 months

6 months, once decision is made to invest

Buyer Roles

Selection driven by a technical network team who will recommend to business buyers

Selection driven by the Service Desk

Business buyers participate earlier in the process

Step 2: Translate Customer Values Into An Effective Coverage Model  Know What the Customer Values  Translate Customer Values Into an Effective Coverage Model  Link Talent Management to Customer Value  Ensure Rewards Support Alignment  Track the Impact

Translate Customer Values Into An Effective Coverage Model

Sales Coverage Myths—and Realities “ Customers will always demand a single account manager.” Myth Reality

“ Single point of contact” does not always mean one person for all customer contacts

Accountability is what customers need… and that can be created and clarified with multiple selling resources

Many customers place tremendous value on having access to both generalists and specialists in order to provide depth of understanding on specific product/service needs

Sales Coverage Myths—and Realities “ A ‘Hunter/Farmer’ sales model is an inward-looking strategy that customers dislike.” Myth Reality

Ultimately, customers will demand a resource that is appropriately focused on them as a customer

Account management is a different skill set that creates customer value when appropriately focused

Process modifications can make the transition relatively seamless to the customer

Sales Coverage Myths—and Realities “ Customers will call their sales rep when they have a problem, so our coverage model will always be strained by a lack of selling time” Myth Reality

A sales rep may be the right initial point of contact, and thus likely needs to be the final point of contact as well

In between, however, customers will generally respect efforts to connect them with the right resources to solve their problems

“ With today’s technology, customers don’t need someone local to interface with them.”

The demographics of your buyers may not fully embrace communications technologies

Certain cultures demand a local relationship in order to do business

There is always a local competitor

Coverage Model: CleanMe Corp Customer Value

Need appropriate expertise in both the capital buying phase and the ongoing consumable materials fulfillment

Solution

Split the job role into a capital sales role and a consumable sales role

Create processes and rewards to ensure integration and customer accountability

Gap

Generalist job role tended to overemphasize capital cycles, due to big ticket prices and less routine “cadence”

Resulted in lack of knowledge on consumable materials

Coverage Model: FixItSoft Customer Value

Different buying centers within a customer for the IT Network Management and Service Management products

Network Management tends to have both a deep technical buyer as well as a “business” buyer

Solution

Take a more measured approach to integrating roles, since the customer is not demanding a single seller

Focus sellers on the “business” buyer and pre-sales technical resources on the technical buyer

Gap

Assumption that there will need to be single sales resource ASAP to minimize confusion

Sellers tended to be overly technical, thus not satisfying the “business” buyer

Step 3: Link Talent Management to Customer Competency  Know What the Customer Values  Translate Customer Values Into an Effective Coverage Model  Link Talent Management to Customer Value  Ensure Rewards Support Alignment  Track the Impact

Defining Customer Competencies Sales Process Linkage Plan Create Optimize Business Acumen Account Planning Relationship Building Communication Negotiation Process Management Buying Process Value Partnership Focus Solution Orientation Value Driven Efficient Vendor

Linking Customer Competencies to Talent Management

Identifying best reps and modeling sourcing and development strategies to replicate

Developing Appraising Onboarding Assessing & Selecting Sourcing

Consistent use of customer value terminology and reference points

Inclusion of customer-focused examples in scoring methods, interview guides, etc.

Consistent reinforcement of aligning customer value to sales performance

Coverage Model: CleanMe Corp Customer Value

Need appropriate expertise in both the capital buying phase and the ongoing consumable materials fulfillment

Solution

Specific competency models for each of the separate roles

Recognizing different talent markets for different roles

Enhanced training program, specifically for consumable sales

Gap

One-size-fits-all job role results in trying to find talent that is competent in all areas, which waters down capability in any single area

Step 4: Ensure Rewards Support Alignment  Know What the Customer Values  Translate Customer Values Into an Effective Coverage Model  Link Talent Management to Customer Value  Ensure Rewards Support Alignment  Track the Impact

Rewards Misalignment: Two Big Faults Fault Why An Issue Pay Mix Too Aggressive Puts additional pressure on generating more sales, creating more of an opportunity for dysfunctional selling Wrong Performance Measures Can overly focus a sales rep on a certain result a the expense of what the customer needs

Rewards Misalignment: FixItSoft Customer Value

Provide the right mix of products and services necessary to solve a business problem at the best value

Solution

Re-weight the performance measures to reflect the more typical mix of require products and services, OR

Adapt a total revenue model

Gap

Compensation plan weighted 80% on product license sales, 20% on services

Product required meaningful services in most cases to effectively integrate – required to generate top ROI

Step 5: Track the Impact  Know What the Customer Values  Translate Customer Values Into an Effective Coverage Model  Link Talent Management to Customer Value  Ensure Rewards Support Alignment  Track the Impact

What to Measure

Progress on aligning with customer values

Customer feedback (satisfaction, engagement, loyalty, etc.)

Your business results

Measure the Impact in the Results -6% -10% 84% 15% 5% 8% 100% 112% Growth Composition View: Segment A Improved from -10% in the prior year Improved from +8% in the prior year Analyze growth to better isolate what is working and what isn’t working

Other Useful Measurement Techniques Win/Loss Analysis