Get Your ROSI Up: How to Improve Your Return on Sales Investment

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To download these slides and access recording: http://www.tigi.net/thank-you-for-attending-rosi-webinar/

Where's the value in sales effort? In today's environment, it's more important than ever to define that effort and act upon it, in order to show your return on sales investment.

TIGI's Gunter Wessels and Sam O'Rear presented this information-packed webinar.

You can expect to learn:

-The true definition of ROSI
-The Value of Sales Effort
-How to Use ROSI to Improve Performance
-Strategic and tactical implications of ROSI
-Actionable Recommendations

At the conclusion of the webinar, Gunter and Sam answered audience questions.

Published in: Business, Technology
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Get Your ROSI Up: How to Improve Your Return on Sales Investment

  1. 1. GET YOUR ROSI UP:How to Improve Your Return on Sales Investment April 18, 2012 Gunter Wessels, Ph.D., MBA Sam O’Rear, M.A. BAPartner, Practice Principal, TIGI Senior Partner, Founder, TIGI gunter@mytigi.net sam@mytigi.net @gunterwessels @TIGI_Inc www.tigi.net © TIGI 2012 All rights reserved
  2. 2. What We’ll Cover 1 ROSI Defined 2 The Value of Sales Effort 3 Using ROSI to Improve Performance 4 Strategic and Tactical Implications 5 Recommendations © TIGI 2012 All rights reserved
  3. 3. 1 ROSI Defined ROSI = Return On Sales InvestmentROSI is a measure of Sales Productivity ROSI = Revenues Sales Costs © TIGI 2012 All rights reserved
  4. 4. How to Find Your ROSI Costs!Cost of the Sales Team is part of SG&A: • Salesperson, Manager, and Support Staff Salaries • Incentive Compensation Cost • Travel Expenses • Technology -- CRM Software, Cell-phones, iPads, etc. • Customer Entertainment Expense • Training and Skill Development Investment • Business Intelligence Databases, Reports, etc. © TIGI 2012 All rights reserved
  5. 5. 2 Where’s the Value in Sales Effort?We asked a group of 15,000 reps where they add value Responses: Evaluation: • Customer Education • Marcom / Product Function • Transaction Support • Contracting, Logistics • Capacity & Stocking • ERP and EDI • Pricing • Product Marketing Function • Relationship Management • Brand, Customer Service • Customer Attention • Inbound Marketing © TIGI 2012 All rights reserved
  6. 6. The Value of Sales EffortPersonal selling adds value and is needed when...• Customers face significant transaction and decision risk.• Companies face transaction, customer, and COGS risk. © TIGI 2012 All rights reserved
  7. 7. ROSI BenchmarksImproving the ROSIBenchmark: ROSI - 8.0How to Improve ROSI? SALES• By Growing Sales• With Sales Cost Flat, to Down COSTSAnalysis by Albers, Mantrala & Sridar (2010 JMR) © TIGI 2012 All rights reserved
  8. 8. Value of Sales Activity: BenchmarksImproving the ROSI with activity Selling Expense Sales Revenue Sales • 31% Current Period Elasticity Management • Meaning: a 10% increase in sales activity leads to a 3.1% change in sales volume. Sales Effort Yields +3.1% Sales Activity in Sales $ +10% Analysis by Albers, Mantrala & Sridar (2010 JMR) © TIGI 2012 All rights reserved
  9. 9. ROSI ExampleYour Company has $60 Million in Sales in 2012Your sales target for 2013 will grow by 6%, i.e. $3.6MThe sales cost was $8M for 2012, and you have beenrequested to keep sales cost level for next year. • How do you attain the growth with zero sales rep adds? • What is the 2012 ROSI? • What will ROSI be for 2013? • How will the Current Period Elasticity work for you? © TIGI 2012 All rights reserved
  10. 10. ROSI ExampleYour Company has $60 Million in Sales in 2012...Your sales target for 2013 will grow by 6%, i.e. $3.6MThe sales cost was $8M for 2012 and you have beenrequested to keep sales cost level for next year. • How do you attain the growth with zero sales rep adds?• 2012 ROSI = 7.5 ROSI Target for 2013 = 7.9• 20% increase in sales activity would yield sales $3.6MManagement Decision: How can we adjust incentivesand activities to increase "face-time" by 20%? © TIGI 2012 All rights reserved
  11. 11. ROSI DriversDriver Example• Focused Sales Effort • Unsought Goods• Product/Service Launches • Innovative Solutions• Sales Effectiveness • Competitive Advantage• Risk Management • Forecast Accuracy © TIGI 2012 All rights reserved
  12. 12. ROSI KillersKiller Example• Lack of Metrics • Outcome Measures• Undisciplined Pricing • Evolving Pricing Policy• Hybrid Channels • Double Coverage• Commoditization • Built-in Demand• Cumbersome Contract • Legalistic Approval and Processes and Policies T&C Negotiation © TIGI 2012 All rights reserved
  13. 13. 3 Using ROSI to Improve PerformanceROSI measures the outcomes of sales behaviors: ROSI IS:Therefore, to "Up Your ROSI"... Quality vs. Quantity• Sales Leadership Requires a Focus On-- Sales Activity: Wins, Velocity, Engagements, and Losses• Performance Compensation Should Be Based On-- ROSI IS: Sales Behaviors: Pay for targeted behaviors Activities vs.• Sales Management Requires Focus On-- Outcomes Coaching Behaviors: Coaching the right sales behaviors in contact with the customer © TIGI 2012 All rights reserved
  14. 14. 4 Strategic & Tactical ImplicationsStrategic Sales Activities: In a Commodity Market: • Relationship Management • Issue Resolution In an Innovation Driven Market: • Three Dimensions of Value Communication • Influencer Engagement • Leverage the Credibility Factor (Branding) © TIGI 2012 All rights reserved
  15. 15. 4 Strategic & Tactical ImplicationsTactical Sales Activities: When selling... • Are we talking to the right people? • What are we talking about when engaging these people? • How is the organization supporting the engagement? • Is there enough of the right activity? Quality in Quantity © TIGI 2012 All rights reserved
  16. 16. 5 Recommendations What to do today: • Calculate your ROSI • for your sales team • for each territory • Evaluate your performance metrics • Re-focus on high value activities • What/where/how do salespeople they spend their time? • What/where/how do managers spend their time? • Evaluate your management infrastructure • What activities are the managers creating and motivating? © TIGI 2012 All rights reserved
  17. 17. 5 Recommendations What to do next: 1. Upgrade skills: Business Acumen, Evidence-Based Selling, Salesmanship, RFP Strategy 2. Update the playbook: Corporate Accounts, Contracting & Coverage Models -- Aimed at the Best Activity Model 3. Revise metrics: Behavior Metrics--Customer Engagement, Wins and losses, Attrition, Margin Compression 4. Assess, develop and package talent: Managers, Specialists, Generalists, New-business, and Support 5. Recognize that behaviors lead to sales: Sales performance is a trailing indicator; sales behaviors are a leading indicator. © TIGI 2012 All rights reserved
  18. 18. Questions? www.tigi.net © TIGI 2012 All rights reserved
  19. 19. As a participant today:Use Code: “2012ROSI” • $1500 credit on a TIGI consultation © TIGI 2012 All rights reserved
  20. 20. Upcoming WebinarsMay 16: 5 Medical Distribution Strategies Doomed to Fail in 2012June 13: How Healthcare Reform Impacts Your Business Today © TIGI 2012 All rights reserved
  21. 21. Thank You Gunter Wessels, Ph.D., MBA Sam O’Rear, M.A. BAPartner, Practice Principal, TIGI Senior Partner, Founder, TIGI gunter@mytigi.net sam@mytigi.net @gunterwessels @TIGI_Inc www.tigi.net © TIGI 2012 All rights reserved

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