SMA_Webinar_June10_2015_SFEImpact

© Copyright 2015 The Sales Management Association.
Sales Management Association Webcast
10 June 2015
Presented by
ZS Explorer Study: Impact of Sales
Force Effectiveness Initiatives

About The Sales Management Association
Slide 2© 2015 The Sales Management Association. All rights reserved.
A global, cross-industry professional association for sales
operations and sales management.
Focused in providing research, case studies, training, peer
networking, and professional development to our membership.
Fostering a community of thought-leaders, service providers,
academics, and practitioners.
Learn More: www.salesmanagement.org

Today’s Speakers
#SalesForce

SFE Explorer Study:
Impact of Sales Force Effectiveness Initiatives
June 10, 2015

− 6 −© 2015 ZS Associates | CONFIDENTIAL
Agenda
 Executive Summary
 Introduction & Research Methodology
 Deep Dive into SFE Initiatives Impact
 Implementing for Success

Building and maintaining a successful sales force can drive substantial
benefit to the business
Sales Force Customers
It is also one of the most
expensive, frequently costing
10% of revenues or more
The sales force can be one of
the most effective channels
to engage our customers

Many
companies are
requesting that
SFE initiatives be
self-funding – but how
do sales leaders project
what success lies beyond
the horizon?

The “Explorer Study,” led by
ZS Associates in partnership
with the Sales Management
Association set out to find
the answer…

If your objective
is non-acquisition
driven growth,
investment in SFE
must be a
key priority
SFE is a complex
system with many
interdependent drivers
– you have to make
the right choices to
get impact where it
matters. ROI is
your compass
The ZS Explorer
study gives you a
better compass;
it is one of the
most diligent and
comprehensive
analysis of ROI
and determinants
of SFE
SFE can and should
be approached with
the same rigor as other
major disciplines
(e.g. Total Quality
Management (TQM),
Lean, etc.)
Implementation is
your new challenge

Based on study findings,
investments in broad SFE
programs deliver between
9-23% incremental growth on
metrics directly or indirectly tied
to revenue in one year; even
project-focused, single initiatives,
have impact, typically delivering
between 4-8% incremental
growth in one year
How high the sail can go is
dependent on the cables
supporting it…
 Industry or Market dynamics
 Prominence of the sales force
 Company dynamics
 Implementation & change
management

Only single-digit
incremental growth? That
seems low!

Let’s see…assuming
you invest in a big
transformation, say 3m…
…and your sales
are 1B…
Actually, more
like 1.5B!
With an 8% increase in sales,
you have a 14x ROI on fees
*@ 35% Gross Margin
That’s not
too bad!
…and if the impact is
only 1%, you still have a
1.75x ROI on fees
Hey, that’s actually
above our internal
hurdle rate for hiring
a new rep
Even in the context of an
average company’s
annual growth of 5-10%,
investments in SFE have
the ability to potentially
double non-acquisition
driven growth

Agenda

ZS has collected over 800 data points from over 80 sources in trying to
help answer “What impact do SFE initiatives truly have?”
Rigorous survey of
literature, including
sources such as
• Academic Articles
• Academic Blogs
• Academic Cases
• Industry Whitepapers
• Industry Cases
ZS project examples
and qualitative
interviews with
practice area experts
800+ Data points from
>80 different sources
SFE
EXPLORER
STUDY
SMA SFE
SURVEY
Online survey with the
Sales Management
Association
~60% of total data
points captured
SMA
Study
Literature
Review
ZS
Case
Studies
Qualitative interviews
with 20 global Sales
Leaders from a variety
of companies across
industries
External
Expertise

Our study with the SMA captured a diverse set of respondents
SMA SFE
SURVEY
A broad range of industries participated
~30% Pharmaceuticals /
Life sciences / MPS
~20% Professional services /
consumer services
~20% Technology
28
20
15
7
5
10
Sales
Leader
Sales
Operations
Sales
Manager
Sales
Services
SalespersonOther
Our sample is highly experienced in sales
< $10M $10M - $100M $100M - $1B $1B - $10B ≥ $10B
12%
with annual
revenue > $1B
85
Respondents
participated
from across
the globe
56%
North America
44%
Worldwide

47% of companies contributing to the broader research were participants
in the SMA SFE study, and represented a wide range of industry sectors
(n=171)
Insights were gathered from ~170 companies in total
SFE
EXPLORER
STUDY
Distribution of companies by industry sector
0
5
10
15
20
25
30
35
Technology (n=30) Pharma /
Life Sciences
(n=28)
Medical Devices
and Services
(n=22)
Consumer
Goods and
Services (n=19)
Financial
Services (n=15)
Professional
Services (n=15)
Industrials /
Manufacturing
(n=12)
Travel &
Transportation
(n=6)
Other (n=24)
SMA SFE Survey Other Source

3%
2%
5%
0%
1%
5%
Under-Achieved Objectives (1-3)
Achieved Objectives (4)
Exceeded Objectives (5-7)
Historical SFE Spend (Delta vs. Average) Future SFE Investment (Delta vs. Average)
Over 90% of SMA respondents considered SFE an important priority in
the future, and on average all respondents will continue to increase their
spend regardless of past objective achievement
Average SFE budget allocation by achievement of profit objectives
Q6. Which choice best describes your organization’s achievement of profit objectives over the past 24 months?
Q15. Over the past 2 years, what proportion of your organization’s budget was allocated towards initiatives designed to support or improve the effectiveness of the sales force?
Q26. Over the next 2 years, what proportion of [Q2 response]’s budget do you expect will be allocated towards initiatives dedicated to improving the effectiveness of the sales force?
Companies who have exceeded their profit objectives
will continue to invest in SFE
SMA SFE
SURVEY
Even those who have under-
achieved in the past, plan to
increase their investment
by an average of ~3%
Companies that exceed
their sales objectives tend
to invest 2-5% higher

Many have encountered
rough waters along the
way in trying to measure
the impact of SFE

SMA SFE
SURVEY
In spite of the priority and high cost of investing in SFE initiatives, many
struggle to find and measure quantified reference points before and
after investment
Q22. What best describes the overall impact (absolute change) you observed/expect to observe in each metric one year following the rollout of your SFE improvements related to [cluster]?
Q24.For the initiatives that focused on the following dimensions, what was the approximate 1-year return on investment?
Q25. Overall, how confident are you in the accuracy of the outcomes you just reported?
Q27. Over the next 2 years, how important do you expect sales force effectiveness to be for your organization?
1 in 4
SMA survey participants
did not have a measurement
plan or metrics to track their
SFE initiatives
>50% of survey respondents
don’t or can’t calculate ROI
Over half of survey
respondents reported
little (if any) confidence in
their measurement abilities
Where resources and infrastructure limit measurement, robust benchmarks
often provide the guidance senior executives search for

While some companies struggle with tracking the revenue impact
associated with SFE initiatives, many companies choose to track the
impact via other types of metrics in building their business case
Metrics used to track SFE Impact SFE
EXPLORER
STUDY
Other metrics
include:
 Market Share
 Cost
 Employee Retention
 Revenue Incremental
Growth Rate
26%
Revenue
Most commonly
tracked metric
17%
16%
9%
7%
25% 26%
Revenue
Employee
Activity
Profitability
Conversion
Rate
Customer
Relationships
Other

Agenda

So what
did we see?

Across the ZS Explorer study we have found that sales leaders typically
invest across four major categories of SFE initiatives
 Sales resource planning,
structure, territory design
 Segmentation
 Account assignment
to teams
 Targeting, territory,
and pipeline
management
 Sales process
 Account planning
 Sales tools & enablers
 Competency model /
role design
 Selection and hiring
 Training
 Coaching
 Performance reviews
 Metrics and
dashboards
 Goals
 Incentives & rewards
 Culture
 Data management
 Analytics
 Reporting and
administration
 Platforms and systems
Ensure the
right customer
coverage plan
Increase the
impact of each
customer
interaction
Create a
performance-
focused sales
team
Enable efficient
and effective
sales operations

Across the entire Explorer study, companies tend to invest across a
broad number of SFE drivers, with a few standing out
0
10
20
30
40
50
60
70
80
Segmentation
Marketinsight
Accountassignments
toteams
Territorydesign
Targeting,Territory,
Pipelinemanagement
Sizingandallocation
Structure
Growthpriorities
Leadershipalignment
Salesprocess
Training
Valueproposition
Accountplanning
Selectionandhiring
Pricingstrategy
Competencymodel
Collaboration
Incentiveandrewards
Goals
MetricsandDashboards
Coaching
Reportingand
administration
Performancereviews
andactions
Culture
PlatformsandSystems
Salestoolsand
enablers
Datamanagement
Analytics
Leadgeneration
andmanagement
PricingandContracting
support
NumberofCompanies
Ensure the right
customer coverage plan
Increase the
impact of each
customer Interaction
Create a performance-
focused sales team
Enable efficient
& effective
sales operations
9 drivers 8 drivers 7 drivers 6 drivers
SFE
EXPLORER
STUDY

As sales leaders always suspected, our research confirms that there is
significant ROI across all categories, no matter how you measure it
Synergies
exist when investing
in multiple categories
1 + 1 > 2
Investments in SFE programs
deliver, on average, 4-8%
incremental growth across a
number of metrics, in a year
Transformative programs
outperform single-cluster
initiatives and deliver on average,
9-23% incremental growth across
metrics – and have shown to deliver
up to 30% in a single year

Our study focused on 4 primary measures of SFE impact
Revenue ROI
Employee
Activity
Profitability
Revenue, growth, and ROI metrics reflect a 1-year timeframe

Investments in transformative sales force effectiveness programs
outperform single-category investments across all metrics
SFE
EXPLORER
STUDY
Comparison of Single Category Impact vs. Multiple
Revenue
(n=52)
Employee
Activity
(n=32)
Profitability
(n=35) 10%
23%
9%
5%
8%
5%
Single Cluster Sales Force Program /Transformation (2+ SFE Clusters)
+4% increase in revenue
+15% increase in employee activity
+5% increase in profitability

9%
4%
5%
8%
5%
30%
11%
13%
17%
12%
0%
0%
0%
2%
1%
Even in single-category projects, the average increase in revenue ranges
from 4-8%
SFE
EXPLORER
STUDY
Results shown within 1 standard deviation. (n1σ165)
Ensure the right
(n=36)
Increase the impact of
each customer interaction
(n=17)
focused sales team
(n=34)
Enable efficient and effective
sales operations (n=26)
Sales Force
Program / Transformation
(2+ SFE categories) (n=52)
Average Increase in Revenue

23%
4%
7%
7%
7%
78%
12%
24%
8%
14%
2%
0%
0%
6%
2%
Across the Explorer Study, we saw similar increase in employee activity,
from 4-7% across single-category initiatives
SFE
EXPLORER
STUDY
Average Increase in Employee Activity
Employee Activity can be
defined as an increase in
the number of actions a
sales representative or
sales organization can take
given a fixed capacity
Examples include increases
in:
 Productivity
 Frequency of customer
touchpoints
 Knowledge retention
 Usage of tech tools
 Time in field
And decreases in:
 Time-to-hire
 Time spent on
administrative activities
Ensure the right
(n=21)
(n=3)
focused sales team
(n=34)
Sales Force

And finally, we saw the same story with profitability, with increases from
5-7% across single-category investments
SFE
EXPLORER
STUDY
Average Increase in Profitability
Ensure the right
(n=23)
(n=3)
focused sales team
(n=24)
Sales Force
10%
5%
5%
7%
6%
29%
12%
13%
10%
12%
0%
0%
3%
3%
2%

In the SMA SFE Survey, we asked respondents to indicate the observed
ROI for each of their individual category investments
SMA SFE
SURVEY
Ensure the right
(n=23)
(n=25)
focused sales team
(n=26)
Average ROI
9%
8%
4%
20%
39%
16%
46%
35%
30%
44%
35%
20%
17%
20%
4%
15%
8%
8%
5%
4%
4%
4%
5%
Less than 0% 1-5% ROI 5-10% ROI 10-15% ROI 15-25% ROI >25% ROI
There is no silver bullet – all categories offer ROI impact, with 80-95%
of respondents seeing positive ROI after only one year
SMA SFE Study: Q24. For the initiatives that focused on the following dimensions, what was the approximate 1-year return on investment?

Four factors predominantly dictate where a company is likely to fall in the
range of observed impact of SFE initiatives
What’s
Achieved
Leadership:
 Right Drivers
 Right Decisions
 Right Change
Management
10-30%4-9%0-3%
 Market maturity & growth rate
 Fragmentation
 Competitor(s) strength
low high
Market Favorability
 Relative influence of the sales
person in overall buying decisionlow high
Sales Force Prominence
 Current sales force effectiveness
high low
Sales Force Effectiveness
What’s Possible
low high
Company Favorability
 Lifecycle (growth, mature, decline)
 Operational footprint & scalability
 Size of current revenue base
 Product/service differentiation

Agenda

Now it’s time to
assemble your own
crew and implement!

We need to ensure that all building blocks for success are in place
Right
Strategy
Knowing what
needs to
change, with a
sound fact-
based or
analytic
business case
Success in
Global Sales
Effectiveness
Buy-in &
Participation
Agreeing on
exactly how to
create these
changes, with the
right priority and
staged
implementation
plan
Changed
Behaviors
Actually
changing,
integrating
change
management
principles
throughout
implementation

SFE teams should take care to spend sufficient energy and resources
on implementation
The value in SFE is not in the diagnosis, but in the action and execution
“How we work
differently and get
better results”
“What we do today
to create the results
we see”
Spend just enough time here to
create motivation for change and
reach agreement on the key
improvement areas
Current state Desired stateDiagnose
(analysis)
Design
(planning)
Develop
(execution)
60% 30% 10%
15% 15% 70%
Frequently
observed
Better
…oops, nothing left
Creating the change

With the
right business
case, you have the
map you need to reach
your destination…
And now
the journey can begin!

Questions and Discussion
Enter your questions in the
“Questions” box on the right
hand side of the webinar
application window.
Did we run out of time before we got to your
question? Presenters can follow-up with you via
email. Feel free to submit more questions if
you’d like an offline response.
#SalesForce

You mention the importance of
implementation. Did the study address or
identify any specific best practices
companies use to make sure their SFE
initiatives get traction and “stick”?
#SalesForce

What are the main drivers of
the increased impact of multiple
vs. single category initiatives?
#SalesForce

The study mentions the importance of
leadership endorsement. Can you talk
more about what you’ve learned about
how to create management buy-in and
support for initiatives?
#SalesForce

Are best practices different depending on company
size when it comes to these SFE initiatives? How
might you modify your approach working with a
decentralized sales organization spread across
multiple business units?
#SalesForce

What else, besides
benchmarking, goes into an
effective business case ?
#SalesForce

SMA_Webinar_June10_2015_SFEImpact

More Related Content

What's hot

Viewers also liked

Similar to SMA_Webinar_June10_2015_SFEImpact

SMA_Webinar_June10_2015_SFEImpact