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Six essentials for sales force success


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Six essentials for sales force success

  1. 1. point of viewSix Essentials forSales Force Success Authored by Jeffrey BakerSales organizations face some tough challenges these “There is no ‘magic bullet,’ but building ondays. Among them is the fact that, while CEOs and boardsof directors are expecting ever greater performance, the basics works.”customers are carefully managing risks and demanding —The Forum Corporation, “How Sales Forces Sustain Competitive Advantage”greater value.To deliver on shareholder demands for stronger EPS The Forum Corporation has been helping salesgrowth, sales and marketing executives are under pressure organizations improve effectiveness and performanceto increase revenue, profitability, and market share. They for 40 years, primarily through building the skills andare tasked with: holding onto and expanding business knowledge salespeople and their leaders need towith current customers while at the same time finding and consistently win in their markets. winning new customers Our research and client experience reveal that, while in existing markets; skillful, engaged salespeople and sales managers are“Business growth is entering new markets; and critically important, they alone are not sufficient for athe No. 1 concern of defending their turf against complex commercial selling organization to achieve itsCEOs in the U.S. and known competitors and goals in today’s fast-paced, hypercompetitive markets. unforeseen threats. Today’s successful sales organizations understand the sixglobally.” Leaders are examining essential dimensions for sales success (see Figure 1). —The Conference Board, the effectiveness of every “2011 CEO Challenge” Figure 1 aspect of their companies like never before—evenextending into the sales and marketing realm, often forthe first time. Furthermore, as CEOs and CFOs scan for Six Success Dimensionsthe best use of capital, many are unsure of the return theyshould expect for an investment in their sales organization. 1. Strategy and Structure 2. Customer KnowledgeWhat kind of ROI commitment should the head of sales 3. Talentmake to her CEO? What areas of investment are likely 4. Climateto yield the best return? Would more salespeople, better 5. Processestraining, newer technology, or perhaps a whole new sales 6. Support Systemsstrategy do the trick? The answers to these questionslie in fully understanding the operational effectiveness ofthe sales force. By analyzing the many interdependentelements of a sales organization both systemically andcontextually, executives can make confident decisions onwhere to invest their energy, talent, and money to gain thegreatest lift in performance.
  2. 2. point of viewThe interdependent nature of these six dimensions is With a clear and common understanding of theirillustrated in Figure 2 (below). Moving from left to right, business strategy, the heads of Sales and Marketingwe see that Business Strategy necessarily precedes and their respective senior teams can develop a salesand informs the other elements of a sales organization’s strategy, sometimes called a go-to-market strategy,process as it flows toward Markets and Customers, that addresses these key elements:the ultimate focus of a sales organization. Information Customer Segmentation. Segment or groupfrom Markets and Customers flows back into the sales customers according to a shared set oforganization and is captured and sorted as Customer characteristics.Knowledge (VOC, or Voice of the Customer) and BusinessIntelligence, both of which provide important feedback to Value Proposition. Establish compelling valueall other elements of the process. propositions for each customer segment.A healthy and consistently successful sales organization is Account and Territory Assignments. Create aconstantly adapting its strategy, capabilities, and practices sales channel plan by assigning types of salesto its customers and markets. resources (for example, general sales reps, key Figure 2. The Sales Organization account reps, inside salespeople, independent resellers, distributors) to each customer segment Marketing Department Marketing Communications by territory.   Customer Sales Force Size and Structure. Determine the Segmentation   Value Sales Management Direct Sales number of sales resources to assign to each Proposition customer segment in each territory (specifically,   Account andBusiness Sales Territory Assignments Customer Care Customer Markets how many and which customers each salespersonStrategy Strategy and (Go-to-Market)   Sales Force Management Care Customers will be responsible for). Determine the number Size and Structure of sales resources each sales manager will   Commercial Policies Channel Management Indirect Sales supervise and direct as well as the number and   Compensation Plan types of resources available to support individual Customer Knowledge (VOC) and Business Intelligence salespeople or sales teams. Processes and Standards Commercial Policies. Establish commercial Metrics and Feedback practices and policies governing pricing, contract terms, order management, order fulfillment,The six essential dimensions that sales executives must reporting, and so forth.integrate and frequently tune to drive consistently high Compensation Plan. Set compensation rules forperformance are outlined below: each salesperson who achieves specific sales1. Strategy and Structure results. Have similar rules for sales teams and sales managers, as appropriate. Achieving consistently successful sales results requires a clear—and clearly communicated—sales A very quick test can help executives determine the strategy based on the company or division business strength of their Strategy and Structure dimension: strategy. Such a strategy also is essential for adapting Simply ask a few salespeople and/or sales managers to inevitably changing market conditions, whether to describe what they are accountable for, how they confronting threats or pursuing new opportunities. select which customers to call on in their assigned Think of the strategy as the rudder of a ship, territories (to meet their accountabilities), what maintaining direction under all weather conditions. their value proposition is, and how that proposition addresses their customers’ needs better than the A company or division strategy must articulate three competition does. components: a key business goal (such as growth, profit, or market share), the market in which it Crisp, clear answers that are consistent across competes (target customer and geography), and its several salespeople and managers indicate a clearly competitive advantage(s).1 communicated and supported sales strategy. Anything less reveals an opportunity for improved sales results“In an astonishing number of as well as vulnerability to competitive threats.organizations, executives, frontlineemployees, and all those in betweenare frustrated because no clear strategyexists for the company or its lines ofbusiness.” —David J. Collis and Michael G. Rukstad, Harvard Business Review, April 2008 2
  3. 3. point of view“Only 50 percent of According to a Forum Onboarding and transitioning of new hires andsalespeople rated their study of salespeople newly promoted salespeople, sales managers, selling complex and senior leaders. The transition period fromcompany sales strategy products or services start date to “fully productive” is expensive andas ‘very clear.’” in the U.S. and the time consuming for any sales organization. Yet the U.K., only 50 percent most effective sales organizations don’t hesitate —The Forum Corporation, 2008 study of salespeople rated to invest in formally equipping their new hires for their company sales success before they make their first sales call and strategy as “very clear.”2 What percentage of your ensure they gain a strong foundation for ongoing sales force can clearly describe your sales strategy? development. Training and development of salespeople, sales2. Customer Knowledge managers, and senior leaders. Aberdeen Group’s To find, win, and keep customers, sales organizations 2010 global study of 835 sales organizations3 must work to continuously understand current and found that best-in-class sales organizations prospective customer needs. An effective sales (which represented the top 20 percent of organization must have a robust and reliable means Aberdeen’s sample) train their people twice as of collecting and analyzing data about its customers’ much as average and low-performing companies. buying behaviors and motives. This includes knowing Regular, consistent talent development addresses not only quantities and purchase frequency, but also knowledge of not only company products and why and how they make buying decisions. services—but also of selling skills, tools, and In addition to getting a glimpse into the “mind of methods; coaching skills; and senior leader skills. the customer,” effective sales organizations must High-performing sales organizations create and understand use competency models and career pathing linked“Best-in-class performing the dynamics to sales strategy and priorities to guide formal andsales organizations train of the industry informal training curriculums. Well-planned, well- and market(s) executed talent development builds confident,their people twice as much their customers high-performing sales teams aligned with theiras average and laggard- compete in as well company sales strategy.performing companies.” as the competitive To identify skill gaps and motivate salespeople forces they face. —Aberdeen Group, and sales leaders to up their game, 360-degree Today’s commercial 2010 study feedback (including customer viewpoints) is buyers expect frequently used in sales organizations. sellers to bring useful industry knowledge and insight to the table to help improve their business. Sales Coaching salespeople and coaching the coach organizations that fail to continually integrate customer (sales manager) is one of the highest-impact understanding with industry insight in order to offer activities a sales organization can implement to ever-increasing value propositions will be swept aside boost sales performance–if coaches have the right by more agile and information-savvy competitors. skills and tools. Forum’s study of 111 senior sales executives around the world found that one of3. Talent the four major categories that distinguish high- The sales force—salespeople, sales managers, senior performing sales organizations is developing their sales leaders and sales support—ultimately must sales managers in three particular areas: coaching, execute on the sales strategy and bring unique and setting strategic direction, and motivating compelling value to customers in order to generate the salespeople. In a follow-up study, Forum found revenue the company is counting on. To find, retain, that only 30 percent of salespeople rated their and grow talent, sales organizations focus on four managers as highly effective in these three areas.4 broad areas: Finally, developing senior sales leaders using Recruiting and hiring new sales talent. Work a combination of formal training, executive with your HR team to establish an ideal profile for coaching, and developmental assignments is an each sales role, and insist that sales managers investment that can boost sales performance actively participate in your company’s recruiting throughout the organization. and hiring process. 3
  4. 4. point of view Retention strategy and succession planning. What makes climate so powerful is that Replacing fully productive salespeople is not only expensive, time consuming, and revenue lowering, it is both manageable and linked to it also can leave customers and territories performance. vulnerable to advances from the competition. A highly engaged sales force has the energy and Highly effective sales organizations deliberately commitment to persevere in the face of all kinds seek to learn what it takes to retain the people they of marketplace challenges. This is a very stong want and put measures in place to accomplish advantage, especially during volatile, uncertain this. Growth and natural employee attrition (due times. A recent Forum study8 revealed climate as to retirement, for example) dictate that effective one of four main categories that distinguish high- organizations continuously identify candidates performing sales organizations from moderate for promotion and systematically prepare them to performers. assume greater responsibilities. As a pioneer in organizational climate research, The Talent management is one area sales leaders cannot Forum Corporation has helped many clients improve delegate completely to others, be it HR or a training their climate over the past 40 years. Climate can be department, if they expect their sales teams to measured with a good deal of precision via surveys outperform the competition and consistently deliver that gauge employees’ perceptions of six factors. excellent results. Sales executives should partner with Sales managers can learn to apply specific practices in-house specialists from HR and training or an outside to strengthen these climate factors. The six climate sales training company to clarify priorities and set factors are: performance standards for hiring and developing their Clarity: Salespeople are clear about what is people. expected of them. Sales leaders at all levels must actively participate in Standards: Management sets high performance recruiting new talent and in training, coaching, and standards and challenges people to improve. reinforcing what their people must know and do. According to the Aberdeen Group findings5, the senior Commitment: Salespeople are dedicated executives of a full 80 percent of best-in-class sales to achieving goals and contributing to the organizations are highly involved and supportive of organization’s success. sales training efforts. Responsibility: Salespeople feel personally responsible for their work and accountable for4. Climate solving problems and making decisions without Employee engagement drives high performance, and a relying on others for direction. positive work climate increases engagement. Although Teamwork: People feel that they belong to an all can sense the climate in their organization and organization characterized by cohesion, mutual within their own team, few leaders understand that warmth, trust, and pride. climate is manageable and linked to performance. Recognition: Salespeople feel that excellent“A positive work climate is not a fun-filled performance is recognized and, a lot of warm, fuzzy stuff, or a place 5. Processesfor relaxation; it is a positive, supportive There are four core processes all sales organizationsclimate, which is conducive to creative, must fully define and consistently follow to ensure high levels of effectiveness:productive work.” New customer acquisition. High-performing —Paul T. P. Wong, Ph.D., sales organizations consistently follow an explicit “The Positive Psychology of Climate Management”6 business development process. This begins with some kind of lead generation or prospecting Numerous studies confirm that the actions of an plan and activities for finding qualified sales employee’s manager are the main determinant of opportunities. The process continues on from climate. Daniel Goleman’s study of the behavior initial opportunity to proposal, close, and of 3,781 leaders found that those whose style has follow-up. This is sometimes called a selling a positive effect on climate have decidedly better methodology or selling system. financial results. His analysis suggests that climate accounts for nearly one third of the results.7 4
  5. 5. point of view Low-performing organizations allow their of salespeople and sales managers (Success salespeople to follow whatever process they Dimension 3) for application and continuous want. High-performing organizations implement improvement. And, as with any process, each and continuously improve a consistent and one should include key metrics and performance reliable selling process across their entire sales targets. force. 6. Support Systems Existing customer retention and growth. High-performing sales organizations invest in Similar to new customer acquisition, effective support practices and systems to boost the sales organizations follow an explicit process for engagement and motivation of their sales teams managing customer relationships in a way that and ensure salespeople are well equipped to builds value from the customer’s viewpoint and serve customers, compete successfully, and work enables the salesperson to uncover and develop productively. The following core support systems are new sales opportunities. This process typically found in such organizations: includes regular customer review meetings to discuss supplier performance and perceived Competitive intelligence. Best-in-class sales customer value. Again, high-performing sales organizations collect and analyze intelligence organizations insist that all salespeople follow about the competition and provide their the same reliable process. salespeople with summaries that include advice on how to position against competitors’ Opportunity management (funnel or pipeline strengths and vulnerabilities. They identify the management). This core process is for sales top two or three competitors in each market managers who are directly responsible for and monitor their account activity, seeking to salespeople. It serves several crucial purposes: understand and exploit their sales strategy. They –– Generates a reliable forecast of orders anticipate and prepare for emerging competitors and revenue required for both financial and pay close attention to their customers’ management and production planning moves to produce products/services themselves –– Enables sales managers to assist in so that they can develop value propositions to advancing a sales opportunity toward closing defeat these moves. and allocate sales support resources to Sales support personnel. McKinsey reported various sales opportunities in 2009 that, during the most severe recession –– Ensures consistent application of the selling in 80 years, high-performing sales organizations processes described above maintained (and even increased) their level of sales support to optimize customer contact time –– Reveals situations for coaching salespeople for their salespeople. in performance improvement According to McKinsey, the key to sizing sales Customer service/customer care. This support is to “examine the customer portfolio. process ensures products and services are How much effort really goes into each customer delivered to customers as promised, revenue and transaction? Which services does each of flows as forecast, opportunities to increase order them need? What are their real profit margins? size and/or sell new orders are recognized and Which customers and markets are growing, and immediately acted upon, and customer problem which are shrinking? Understanding customers reports are fixed promptly. allows companies to focus sales resources This process may be managed outside the sales where they are needed and to cut waste, not organization, but it is nevertheless critical that value.”9 Determine the percentage of time your sales leaders ensure it works consistently and salespeople spend preparing for and meeting effectively. Customer loyalty, additional sales, with customers, and consider how to increase and referrals to new prospects depend on high- this percentage through more effective sales quality customer care processes. support. To be most effective, all four processes must Performance management (including integrate a company’s sales strategy (Success standards and accountabilities). Set clear, Dimension 1) with its customers’ buying achievable performance goals in at least two key process (Successs Dimension 2). Further, these areas: sales quota and sales activities. Ensure processes depend on the skill and discipline they align with the overall sales organization 5
  6. 6. point of view goals and strategy. Measure performance and products, services, pricing, methods, policies, provide feedback to salespeople and managers procedures, and so forth. Rather than having regularly (at least monthly, although daily and sales reps spend precious time trying to learn weekly reporting can be effective for some and remember ever-growing amounts of goals). Apply standards consistently throughout company information, shift to a system that the organization, and hold people accountable. enables them to quickly find what they need, Conduct formal employee performance reviews when they need it. at least annually. –– Business intelligence. This is a collection of Rewards and recognition. These include systems (and arguably another process in finding opportunities to formally and informally its own right) that helps sales professionals recognize outstanding contributions to the make use of data from three areas: customer- business and establishing written sales incentive specific buying patterns, industry-specific compensation plans consistent with the overall trends, and macroeconomic trends. At a sales strategy and goals. An achievable quota minimum, salespeople should have access within their assigned accounts or territory to basic customer and industry data to is critical to motivating and retaining good prepare them to speak knowledgeably salespeople. during customer calls. High-performing Business scorecard with predictive metrics. What return should a sales leader Establish and publish a scorecard that reports the “critical few” measures: financial, customer promise the CEO for investing in the behavior (such as wins, retention rate, and so sales organization? on), sales activities (pipeline quality, quantity, velocity, and so on), and sales force engagement sales organizations are gaining competitive or climate (Success Dimension 4). Salespeople, advantage by crunching customer-proprietary sales leaders at all levels, and sales support data with more widely available market teams should all receive regular scorecard information to generate insights for their reports that are relevant to their accountabilities customers and to uncover new opportunities and clearly linked to the sales strategy. to help their customers create more value. Information systems. All management systems rely on timely, robust information to operate Is Your Sales Organization Ready for effectively. Sales leaders should require their Tomorrow’s Challenges? information systems to supply actionable data in CEOs want more predictable results from their sales at least the following key areas: organizations. Gone are the days (if they ever truly –– Financial data. Provides a picture of total existed) when a sales leader could simply hire lots of revenue and profitability (at least gross profit) high-energy outgoing sales reps, turn them loose to make that can be sorted in any number of ways, customer calls from morning to night, and be assured of a including by customer, sales rep, sales team, predictable, ever-increasing revenue stream. Commercial region, industry, channel, weekly, monthly, selling is as demanding today as other business functions, and yearly. Financial data also should including finance, marketing, RD, and supply chain supply sufficient cost information for use in management—yet in many companies sales force managing sales force productivity. management and sales force effectiveness lag significantly compared to other business disciplines. Very few business –– Customer relationship data. SFA/CRM (sales schools have caught up to the needs of commercial sales force automation/customer relationship executives. The Forum Corporation is ready to help you management) platforms have become a must now. for any company selling multiple products in multiple customer segments. They allow sales Contact Forum to discuss how our sales force reps and sales leaders to track and maintain effectiveness assessment can illuminate opportunities to sales activity and customer interaction increase the performance of your sales force. If you have history, and they house extensive customer already determined how to improve your sales organization contact infomation. and are in the process of either designing or implementing changes, Forum can help you rapidly execute those –– Knowledge management. This should be an changes and sustain the gains from your investment. easily searchable current repository of all available information regarding a company’s 6
  7. 7. point of viewEndnotes:1. For an excellent straightforward discussion of strategy, see “Can You Say What Your Strategy Is?” by David J. Collis and Michael G. Rukstad, Harvard Business Review, April 2008.2. “Sales Force Effectiveness: A Street Level View,” research report, The Forum Corporation, 2008.3. “Sales Training: Deploying Knowledge, Process and Technology to Consistently Hit Quota,” research report, Aberdeen Group, 2010.4. “Sales Force Effectiveness: A Street Level View,” research report, The Forum Corporation, 2008.5. “Sales Training: Deploying Knowledge, Process and Technology to Consistently Hit Quota,” research report, Aberdeen Group, 2010.6. Paul T. P. Wong. “The Positive Psychology of Climate Management,” president’s column, International Network on Personal Meaning, August 2001. Daniel Goleman. “Leadership That Gets Results,” Harvard Business Review, March-April 2000.8. “How Sales Forces Sustain Competitive Advantage,” research report, The Forum Corporation, 2004.9. Anupam Agarwal, Eric Harmon, and Michael Viertler. “Cutting Sales Costs, Not Revenues,” The McKinsey Quarterly, 2009. Forum is a recognized global leader in linking learning to strategic business objectives. Our learning solutions help organizations effectively execute their business strategies by focusing on their most important asset: their people. We provide clients with practical and research-based advice and tailored programs that mobilize employees, accelerate business-initiative implementation, and improve agility. Forum’s 40-year legacy as a pioneer and thought leader continues with the release of our latest book, Strategic Speed (Harvard Business Press). For more information, visit © 2012 The Forum Corporation 7