Hbs moorman sales force transformation 060512

1,816 views

Published on

Published in: Business, Technology

Hbs moorman sales force transformation 060512

  1. 1. Transforming the Sales ForceAnticipating the JourneyHarvard Business School: Thought Leadership on the SalesProfessionJune 5, 2012This presentation is solely for the use of ZS Associates. No part of it may be circulated,quoted or reproduced without prior written approval of ZS Associates. ZS Associates | 312.233.4800 | www.zsassociates.com
  2. 2. Sales & Marketing effectiveness is achieved by focusing on the drivers & their interdependenciesMarket Insight Go-To-Market Strategy Operational Excellence Sales Force Channels • Sizing • Segments Sales • Territories • Capacity Resources • Account Targeting Planning • Territory & Pipeline Mgt Channels & • Culture Customer Sales Force Knowledge, • Competency Model Skills & • Benefits & Insight Structure • Hiring Rewards Behaviors • Training & Coaching • Partner • Performance Measures Program Management Motivation • Incentives & Rewards • Performance Reviews Segmentation ValueCompetitor & Growth Proposition Tools • Sales Process & Decision Support Tools Insight Strategy Strategy • Marketing Mix • Demand Generation Marketing • Lead Nurturing Programs • Sales Force & Partner Enablement Market Customer • Community BuildingEnvironment Engagement Process • Data & List Management • Sales Admin Operations • In-line Forecasting (Sales, • Reporting Marketing, • Analytics Channels) • Agency Management • Platforms & Systems Management© 2012 ZS Associates −2− HBS_Moorman_Sales Force Transformation 060512
  3. 3. The path to success is not always the same Incremental Transformational Year-over-year Larger scale continuous strategy &/or improvement capabilities change© 2012 ZS Associates −3− HBS_Moorman_Sales Force Transformation 060512
  4. 4. Continuous or Discontinuous? Incremental Transformational • Always • Significant change in buyer needs or processes • New corporate strategies (organic, M&A) • Structural change in a market • Company or market lifecycle • Lagging performance© 2012 ZS Associates −4− HBS_Moorman_Sales Force Transformation 060512
  5. 5. The Transformation Journey – A Case Example • Manufacturer of injection molding equipment • Increasing number of global customers • Complex customer landscape • Mold Makers • Low market growth • Molders • End-Users • Diminishing technology advantage, aggressive and • Industry leader at ~15% share rapidly growing competitors • Global operations and • Experiencing declining share, customer base in diverse and slightly declining price industries premiums • Complacency at many levels© 2012 ZS Associates −5− HBS_Moorman_Sales Force Transformation 060512
  6. 6. “Can’t we just provide training and change the sales force’s incentives?”© 2012 ZS Associates −6− HBS_Moorman_Sales Force Transformation 060512
  7. 7. A deep dive evaluation resulted in important insights & precursors to successful change Workout 1 Workout 2 I. Sales Strategy II. Market Coverage III. Sales Process & Tools • Customer Needs, Buying • Sales Force Structure & Roles • Sales & Service Process, Processes & Potentials Activities & Roles (CRM • Sizing & Allocation Strategy) • Segmentation • Territories • Sales Tools & Enablers • Growth Strategy • Account Targeting • Market Offerings & Value Propositions • Pricing Strategy Workout 3 VI. Sales Support V. Culture & Motivation IV. Knowledge & Skills • Sales Administration • Sales culture • Competency Model (Territories, Goals, Incentives) • Measures & reporting • Hiring & Selection • Reporting (Standard, Ad-hoc) • Recognition & rewards • Training • Analytics (Standard, Ad-hoc) • Goals • Coaching • Account Universe Data & • Performance Reviews Systems© 2012 ZS Associates −7− HBS_Moorman_Sales Force Transformation 060512
  8. 8. First pivotal moment: “We’re good, but need to be far better” 1. Improve our 3. Instill a coverage of 2. Increase the performance the most impact of each focused and valuable and every accountable customers and sales call sales culture prospects© 2012 ZS Associates −8− HBS_Moorman_Sales Force Transformation 060512
  9. 9. Transformation requires a systematic, fact-based approach to strategy design & sustainability May June July Aug Sep Oct Nov Dec Launch Sales Force Structure Territories & Sizing Design Customer Insight & Segmentation Baseline Value Sales Process & Tools Proposition Competency, Selection Training & Hiring Incentives Plan Goals Setting Dashboard & Performance Mgt. Sales & Marketing Operations Capabilities© 2012 ZS Associates −9− HBS_Moorman_Sales Force Transformation 060512
  10. 10. 1. Improve our coverage of the most valuable customers and prospects § Role pollution, too little selling time 1. Improve our § Too much focus on small accounts, to coverage of little focus on new mid-market accounts the most valuable customers and § Fragmented approach to global customers Current prospects Situation § Best talent not on most important accounts § Heavy & light territories© 2012 ZS Associates − 10 − HBS_Moorman_Sales Force Transformation 060512
  11. 11. Quality estimates of account-level potential was key to a new growth strategy, sales force optimization, and goals setting Average Estimated Potential and Sales (US) 1,500 Potential ($ 000s) 1,000 Sales 500 0 Value Segment 1 2 3 4 5 Accounts 42 125 187 434 2,351 Avg. Annual Pot. 1,470 316 142 74 33 ($000s) Avg Annual Sales 364 124 21 18 8 ($000s) Mid-Market Very Small Key Accounts Accounts Accounts© 2012 ZS Associates − 11 − HBS_Moorman_Sales Force Transformation 060512
  12. 12. An actionable segmentation enabled better value proposition and sales force design strategies & execution Needs & Buying Processes Global Accounts (10 strategically critical accounts) Program Buyer Systems Buyer (no / low sale) (>$500k in Pot.) Primary Decision-Maker Primary Decision-Maker Prospects Key Account Potential Program Buyer Systems Buyer Secondary Influencer Secondary Influencer Mid-market market Systems Buyer Systems Buyer Primary Decision-Maker Secondary Influencer (<$50k in Pot.) Accounts Small© 2012 ZS Associates − 12 − HBS_Moorman_Sales Force Transformation 060512
  13. 13. A detailed review of sales force activities and effort allocations resulted in significant rationalization Maintain Increase Current Activities Decrease & Effort Stop Allocations Re-assign New© 2012 ZS Associates − 13 − HBS_Moorman_Sales Force Transformation 060512
  14. 14. Restructuring the sales force improved role clarity, coordination and accountability – while reducing redundant work Strategic • Named global accounts & key Project Accounts accounts Engineer Manager • Executive sponsorship program (Global, Key & (Global & Key Mid-market • Elevated support levels accounts) accounts) • Mid-market customers and global / • Technical due Field Sales key account affiliates diligence, order (Mid-market • Grow under-penetrated and prospect fulfilment accounts) accounts administration and coordination of account service & support • Senior PEs aligned Inside Sales against SAM accounts • Named small accounts (and some (Small geographically remote accounts) accounts) New roles© 2012 ZS Associates − 14 − HBS_Moorman_Sales Force Transformation 060512
  15. 15. Sales response analysis provided new insight into sales force value, optimal size, and optimal allocation Revenue $ Impact Profit Contribution Sales Force Size© 2012 ZS Associates − 15 − HBS_Moorman_Sales Force Transformation 060512
  16. 16. Territory optimization improved coverage and goals fairness 2.2 2.0 1.8 Territory Workload (FTEs) Be Heavy Territories = Lost Growth 1.6 fo re 1.4 1.2 Afte Acceptable Balance: +/- 20% 1.0 r 0.8 0.6 0.4 Light Territories = Wasted Resource 0.2 0.0 Territories Sorted by Target Account Workload (per Account Coverage Plan)© 2012 ZS Associates − 16 − HBS_Moorman_Sales Force Transformation 060512
  17. 17. 2. Increase the impact of each and every sales call § Role pollution (more service than selling) 2. Increase the § Order takers (vs. proactive selling) impact of each and every § Features and price pitches Current sales call § Not calling on the front office (only the Situation manufacturing contacts) § Little attention to territory, account or call planning© 2012 ZS Associates − 17 − HBS_Moorman_Sales Force Transformation 060512
  18. 18. A bottom-up / top-down approach proved to be an effective way to break through to the next level of sales process capability Early Experience Team Full-Scale Rollout & Accounts Hiring & Selection Process Refined Sales Processes & 360o Training Proof Competency Approaches Points & Model Coaching Process Advocates & Tools Role Expectations Performance Customized Sales Tools & Enablers Review Content Reward Systems© 2012 ZS Associates − 18 − HBS_Moorman_Sales Force Transformation 060512
  19. 19. A “3-legged race” (vs. “baton hand-off”) proved to be a powerful approach for developing winning value proposition strategies and enablers “For companies looking to maximize manufacturing performance, we provide the leading solution, helping to lower overall costs and minimize business risk” Leading technical Lower total cost of Reduced business solution ownership risk • Leading technologies and • Reduced production costs: • Leading provider, with global innovations manufacturing, sales and –High up-time and service footprint • Broad product portfolio reliability addressing spectrum of • Industry leadership in –High quality applications, from simple to technical due diligence and highly complex –Minimized waste design, minimizing implementation risk and • Tailored solutions to meet –Lowest running costs quality issues specific application needs • Streamlined product • Industry leading warranty fulfillment process programs • Rigorous project management and fulfillment© 2012 ZS Associates − 19 − HBS_Moorman_Sales Force Transformation 060512
  20. 20. A new class of sales tools proved instrumental in motivating and enabling effective value-based selling Key Sales Process Enablers Value proposition tools: Other Sales process enablers: • Baseline market offerings & • Pre-call planning template value proposition • Needs assessment checklist • Value proposition communication tool • Prospect lists • Cost-in-use calculator • Account review presentation template • Competitive offerings comparison (Fighting guide) • Account planning template© 2012 ZS Associates − 20 − HBS_Moorman_Sales Force Transformation 060512
  21. 21. Training was critical. Apprenticeship was even more important. Coaching is the secret sauce. Bi-weekly Sales Activity • Review pipeline activities (penetration, retention & acquisition) Meeting • Review account targeting Tactical+ • Agree on & review “Top 5” opportunities (1st: 30 min., conf. call) • Review account plans & next steps on “Top 5” opportunities (2nd: 60 min., face-to-face) • Resolve issues Quarterly Performance & • Performance review & feedback Territory Plan Review – Performance to goal Strategic – VBS capabilities (90 min., face-to-face) – Personal development plan • Win/loss reviews • Assess & agree territory & pipeline development plan • Review account plans for top priority accounts Rep Rides Review/coach: • Call planning Tactical Top 20%: 3x/Qtr • Call execution Mid 60%: 4x/Qtr • Value proposition development & communication Low 20%: 3x/Qtr • Sales process execution • Basic sales skills© 2012 ZS Associates − 21 − HBS_Moorman_Sales Force Transformation 060512
  22. 22. 3. Instill a performance focused and accountable sales culture § Pockets of complacency 3. Instill a § Account hoarding performance focused and § Inconsequential goals accountable Current sales culture § Tolerance of poor performers Situation § No common sales culture© 2012 ZS Associates − 22 − HBS_Moorman_Sales Force Transformation 060512
  23. 23. Rate-gate incentive plans and new metrics drove greater pay for performance relative to critical objectives Goal based component = 80% Management by Objectives (MBO) = 20% SAM FS IS PE SAM FS IS Payout curve 250% Performance vs. expectation % of target payout 200% Metric Below Meets Exceeds New product sales 150% Pricing 100% Strategic account 50% conversion (SAM only) 0% 50% 100% 150% Goal attainment (%)© 2012 ZS Associates − 23 − HBS_Moorman_Sales Force Transformation 060512
  24. 24. Performance reporting, including ranking, proved to be tremendously motivating Sales Dashboard June 10, 2010 John Smith© 2012 ZS Associates − 24 − HBS_Moorman_Sales Force Transformation 060512
  25. 25. Competency models aligned to the sales process increased relevance and impact Level Dimensions Pre-Basic Basic Intermediate Expert General 1. Territory and pipeline management 2. Account Planning 3. Call planning 4. Accountability and performance focus All Roles Sales Process Focus 5. Customer needs & opportunities assessment 6. Market offering / value prop development 7. Value prop communication & proof 8. Negotiations & solution agreement 9. Implementation management 10. Value reinforcement / account management KAM/SAM/GAM 11. Team leadership & coordination 12. Internal impact Role Specific First Line Manager 13. Coaching & Apprenticeship (1-10 above) 14. Hiring 15. Performance management 16. Translating business strategy to team 17. Motivating the team© 2012 ZS Associates − 25 − HBS_Moorman_Sales Force Transformation 060512
  26. 26. Sales leadership was disciplined. No warm body placement or hiring.© 2012 ZS Associates − 26 − HBS_Moorman_Sales Force Transformation 060512
  27. 27. Currently tracking significantly above plan, in large part driven by SFE initiative SST Business Case CAGR 10% Projected +2% share 28%* point growth and 7% +28% revenue growth for 2010: • ~15% revenue growth driven by market recovery Base Case Forecast • ~13% revenue growth driven by market share gains (from historically SST Forecast flat to declining share position) Actual 2009 2010 2011 2012 SST Business Case Projected Share Increase 1.1% 2.1% 2.4% 1-yr ROI 20% 125% 158% 3 Year Discounted ROI 93% 262% 315% * Projected based on 2010 actuals through mid-September© 2012 ZS Associates − 27 − HBS_Moorman_Sales Force Transformation 060512

×