1. Charting the Course
to High-Impact
Sales Effectiveness
Investments
Marshall Solem, Torsten Bernewitz,
Rodolfo Luzardo, Namita Kalyan and Eric Scott
2. Jim Gardner, VP of sales, sips his morning coffee and reviews the notes from
yesterday’s one-on-one meeting with his CEO. The CEO has just upped the ante for
the organization this year, asking for an additional 5% sales growth above the current
plan, without resorting to acquisitions. Under Jim’s leadership, the sales organization
has always hit its numbers, but this new target will be extremely challenging,
especially given some emerging issues that Jim recently identified through some
benchmarking work:
+ The sales team is struggling to capture new customers. They are not spending
enough time prospecting, the overall sales process is weak—including poor
pipeline management and low conversion rates—and they have a difficult time
differentiating the company’s offering and value proposition.
+ Additionally, the incentive plan and coaching approach are growing stale.
+ Finally, the CRM system is outdated, requiring that reps spend significant time on
admin tasks rather than selling.
Jim is convinced that addressing two or three of these issues would close the gap
toward his aggressive sales target. The challenge is that each requires an investment
above his planned budget, and therefore, must be self-funding. In the past few years,
Jim has pitched the executive team on investing in various sales force initiatives, but
he could never build a convincing business case. Almost as if on cue, an invitation
from the CEO’s assistant arrives for a follow-up meeting at the end of the week with
the CEO. Subject line: “Discuss plan to achieve new sales growth target.”
Charting the Course
to High-Impact
Sales Effectiveness
Investments
Marshall Solem, Torsten Bernewitz,
Rodolfo Luzardo, Namita Kalyan and Eric Scott
3. Does this situation sound familiar? Across industries, organic growth is
a common imperative. Yet growth is becoming more difficult in a sales
environment that is evermore challenging and complex, where sales functions
seem to have the deck stacked against them: Buyers are increasingly
sophisticated, with professionalized procurement departments that have access
to more information and greater transparency on pricing. Greater numbers of
stakeholders are involved in procurement, meaning more approvals before a
purchase order is signed. Globalization is a factor as well—as borders are
opening up, companies are no longer going up against competitors in the same
market but against those in the entire world.
Sales leaders know that they need to invest in sales force effectiveness (SFE)
initiatives, yet such investments often carry a steep price tag and often require a
clear business case that can be challenging to make. Why challenging? There
are few objective benchmarks available regarding typical performance gains
attainable through SFE investments. Sales leaders know these investments will
help, but without good benchmarks, they find it difficult to build the business
case. They’re essentially asking the company to sail into uncharted waters.
To finally penetrate the mystery of the impact of SFE initiatives, ZS launched the
Explorer Study—an extensive analysis conducted over the past year—to answer
the elusive question, “What is the impact of investing in SFE initiatives?”
Ultimately, our study has found that when companies invest in a broader sales
transformation across several drivers, they can improve their performance by
as much as 20% or more within one year. This improvement is reflected across a
number of metrics, including revenue, sales force activity and profitability. Even
in situations where companies need to focus on individual SFE initiatives (versus
a broader SFE program), our research still found that they can improve their
performance by 4% to 8% in one year.
To reach these findings, we conducted qualitative research with sales leaders
across industries. We followed this with a more detailed quantitative survey, in
partnership with the Sales Management Association (SMA), as well as an
extensive and robust literature search, and an in-depth analysis of ZS’s client
work in sales force effectiveness over the past 30-plus years. In the aggregate,
the Explorer Study research led to detailed data from 171 companies, with more
than 800 specific data points on the impact of various SFE initiatives. (For more
details, see the methodology sidebar.) Through this research, we mapped the
potential benefits available to companies from investing in SFE initiatives.
In terms of ROI, the numbers are even more compelling. For example, consider
a company with annual sales of $1.5 billion that invests $3 million on an SFE
program or transformation. A boost in revenue of 8% translates to an
incremental ROI of more than 1,400% in the first year (assuming 35% gross
margins). Even a smaller, incremental revenue increase of only 1% equates to a
one-year return of 175%. The bottom line: Companies that don’t invest in SFE are
likely leaving money on the table. A lot of money.
1
Methodology
In the spring of 2014, ZS conducted
qualitative interviews with 20
leaders of sales force effectiveness,
across industries, to gauge their
perceptions of SFE initiatives and
their impact. We then conducted a
quantitative study, in partnership
with the Sales Management
Association (SMA), in late 2014. That
quantitative, online study received
85 responses. We also conducted an
extensive literature search of
academic journals, white papers,
trade publications and other
business media on the topic of
SFE—searching, in particular, for
data on quantifiable gains in
performance. Finally, we collected
case examples from ZS’s work in
helping clients implement various
SFE initiatives. All of this information
was compiled into a database with
approximately 800 data points
across more than 171 companies
(see Figure 2).
4.
5. 3
Figure 1: Four factors determine the potential upside from SFE investments, while leadership factors
determine what companies actually achieve relative to that potential.
To be sure, some of the factors that determine the potentially feasible
performance improvement are outside of a sales leader’s control, such as the
market environment and the company’s competitive position. However, leadership
factors, such as selecting the right SFE drivers to focus on, championing
decisions, spearheading change management processes and, most important,
ensuring the quality of implementation determine how much of the feasible
performance improvement a company will actually capture (see Figure 1).
low high
low high
high low
low high
What’s
Achieved10-30%4-9%0-3%
Sales Force Prominence
Sales Force Effectiveness
What’s Possible
Company Favorability
+ Market maturity and growth rate
+ Fragmentation
+ Competitor(s) strength
Market Favorability
+ Lifecycle (growth, mature, decline)
+ Operational footprint and scalability
+ Size of current revenue base
+ Product/service differentiation
+ Current sales force effectiveness
Leadership:
+ Right Drivers
+ Right Decisions
+ Right Change
Management
+ Quality
Implementation
Four factors predominantly dictate where a company is likely to fall in the
range of observed impact.
+ Relative influence of the salesperson
in overall buying decision
6. In a more complex sales environment, the Explorer Study findings provide
companies insight into the range of impact that various SFE initiatives can have,
helping sales leaders build a strong business case for the needed investments.
This is the first of several publications that we will use to present our findings.
Subsequent articles will include deep dives with detailed analyses of this data set
broken out by industry and type of SFE initiative. We will also provide guidance on
how best to build a business case for SFE initiatives, and discuss the critical
importance of execution and embedding an SFE mindset as a consistent part of a
company’s culture.
4
Figure 2: Our study analyzed impact of SFE initiatives by companies in a range of industries.
Distribution of Companies by Industry Sector
0
5
10
15
20
25
30
35
Technology
(n=30)
Pharma or
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 or
Manufacturing
(n=12)
Travel and
Transportation
(n=6)
Other
(n=24)
(n=171)
7. Explorer Findings
Our findings confirmed that companies typically invest in, and see impact from,
four major categories of SFE improvement. Each category contains multiple
sales effectiveness initiatives:
Ensuring the right customer coverage plan
+ Segmentation
+ Sales resource planning, structure, territory design
+ Account assignment to teams
+ Targeting, territory and pipeline management
Increasing the impact of each customer interaction
+ Sales process
+ Account planning
+ Sales tools and enablers
+ Competency model or role design
+ Selection and hiring
+ Training
Creating a performance-focused sales team
+ Coaching
+ Performance reviews
+ Metrics and dashboards
+ Goals
+ Incentives and rewards
+ Culture
Enabling efficient and effective sales operations
+ Data management
+ Analytics
+ Reporting and administration
+ Platforms and systems
5
8.
9. Companies can invest in just one initiative within a category or, if they’re embarking
on a more ambitious effort, they can invest in an SFE program or transformation
(defined as investments in at least two categories). While many companies struggle
to measure the impact of SFE investments, many have one or two specific
examples of impact from SFE initiatives that they feel confident in. The Explorer
Study has taken those anecdotal examples and aggregated them into one of the
most comprehensive reviews of sales effectiveness outcomes across industries
and companies. We were able to identify outcomes benchmarks for both the
smaller point initiatives as well as broader sales transformation efforts.
In terms of revenue, companies that launch SFE programs or transformations—
i.e., investments across two or more categories—improve their performance in
revenue by 9%, on average, in the first year. The gains in employee activity are
even more impressive, at 23%—the equivalent of adding an extra day, each
week, in the field for the sale force! (The disparity between those two metrics is
likely because employee activity is often a leading indicator for revenue, as a
newly empowered sales force begins laying the groundwork for future sales.)
Regarding profitability, our data show that SFE programs lead to one-year
increases of 10% (see Figure 3). These results track with expectations: Efforts
across multiple areas can often complement each other and lead to synergies.
Figure 3: Across all three metrics, investing in multiple categories through sales transformation shows a
higher overall impact compared to investing in a single category of initiatives.
10%
23%
9%
5%
8%
5%
Single Category Sales Force Program or Transformation (Two-plus categories)
Revenue
(n=52)
Employee
Activity
(n=32)
Profitability
(n=35)
+4% increase in revenue
Comparison of Single vs. Multiple Category Impact
+15% increase in employee activity
+5% increase in profitability
7
10. When looking at SFE investments in a single initiative, the results still show that
companies can generate a sales lift of 4% to 8% across the four individual
categories (see Figure 4). Similarly, in terms of employee activity among the sales
force—as measured by productivity, frequency of touch points, field time and
similar metrics—companies can generate increases of 4% to 7% (see Figure 5).
And in terms of profit, SFE investments yield increases of 5% to 7% (see Figure 6).
Figure 4: The average increase in revenue is 4-8% from a single category of SFE initiatives
Ensure the right
customer coverage plan
(n=36)
Increase the impact of
each customer interaction
(n=17)
Create a performance-
focused sales team
(n=34)
Enable efficient and effective
sales operations
(n=26)
Sales force
program or transformation
(Two-plus SFE categories) (n=52)
5% 13%0%
4% 11%0%
30%9%0%
5% 12%1%
17%8%2%
Average Increase in Revenue
Results shown within 1 standard deviation. (n1σ165)
Figure 5: The average increase in employee activity is 4-7% from a single category of SFE initiatives
Average Increase in Employee Activity
Ensure the right
customer coverage plan
(n=21)
Increase the impact of
each customer interaction
(n=3)
Create a performance-
focused sales team
(n=34)
Enable efficient and effective
sales operations
(n=21)
Sales force
program or transformation
(Two-plus SFE categories) (n=32)
23%
4%
7%
7%
7%
78%
12%
24%
8%
14%
2%
0%
0%
6%
2%
Results shown within 1 standard deviation. (n1σ111)
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
8
11. Figure 6: The average increase in profitability is 5-7% from a single category of SFE initiatives.
Average Increase in Profitability
Ensure the right
customer coverage plan
(n=23)
Create a performance-
focused sales team
(n=24)
Enable efficient and effective
sales operations
(n=19)
Sales force
program or transformation
(Two-plus SFE categories) (n=35)
5% 13%3%
5% 12%0%
6% 12%2%
7% 10%3%
Results shown within 1 standard deviation. (n1σ104)
10% 29%0%
Increase the impact of
each customer interaction
(n=3)
A Steady Hand on the Rudder
As a baseline, the median performance gains from SFE initiatives are significant.
However, our study also found that there is significant variance in the range of
reported outcomes. Some of the difference stems from a company’s specific
situation. Market-related factors such as the maturity, growth rate and degree of
fragmentation all affect potential impact from SFE investments, as do the strength
of competitors and the degree of concentrated buying power among customers.
Similarly, company-specific factors play a role, such as differentiation of products
and services in the market, geographic footprint, degree of maturity and starting
level of SFE excellence.
For example, a startup in a high-growth industry may be able to generate
significant gains from an SFE investment. Conversely, a large, mature company
with leading market share in a stable industry may see a lower percentage impact,
though its larger sales force and revenue base will mean a larger impact in
absolute dollars.
Yet for all companies, the ability to capture the impact from SFE investments and
generate a strong ROI is within management’s control, and it stems from three
specific factors: engaged leadership, quality implementation and effective change-
management processes. More specifically, our findings show that leadership
alignment and sponsorship are crucial, along with a strong base of facts regarding
the company’s situation, sound analytics and thoughtful solution design. Regarding
change management, companies also need champions within the sales force,
along with field coaches and first-line sales managers who buy in to the initiative
and can drive in-field changes.
9
12.
13. A Call for Companies to Venture Forth
In a business environment that becomes more competitive each day, SFE is
critical to a company’s ability to meet organic growth targets. SFE should be
treated with the same rigor as other major disciplines (such as Total Quality
Management, Lean, Six Sigma and Agile, among others) in order to maximize
the impact of the investments. The Explorer Study findings fill a critical gap, by
arming sales leaders with the benchmarks they need to build a compelling
business case to justify SFE investments. The findings show that there are
clear performance gains available in most metrics, such as revenue,
profitability, employee activity and ROI.
In addition, among the 171 companies we considered, the best performers
follow a clear path: They adopt a continuous mindset approach to SFE, with
steady, incremental gains that are punctuated on occasion by more
comprehensive sales force transformations. These companies identify a few
key areas to improve every year, and they rigorously track the impact of those
efforts to ensure quality execution.
As Jim leaves the business review meeting with his CEO, he cracks a smile. To
prepare, he analyzed similar companies and industries and determined that the
company could reliably increase both revenue and profitability by 5% through a
program that focused on two of the company’s most pressing SFE issues. Jim also
had a clear implementation plan, with timelines and target objectives at each stage.
As a result, his presentation to the CEO hit all the right notes, and the CEO signed
off faster than Jim would have imagined. “But it’s not just writing a check,” the CEO
said. “Your next challenge is implementation.” On the way back to his office, Jim
realizes the hard part is still to come.
11
14. About the Authors
Marshall Solem is a Principal based in ZS’s Evanston, Ill.,
office. Marshall is the former leader of the firm’s global
Sales Solutions Practice and also spent five years leading
the company’s Midwest region with 225 consulting
professionals. Marshall’s client work is focused on helping
companies improve commercial effectiveness through
development of world-class go-to-market strategies.
Marshall also helps clients to implement the new sales
strategies by providing guidance on territory design, talent
management, incentive compensation design, sales force
effectiveness and commercial analytics.
Torsten Bernewitz is a Principal based in ZS’s Princeton,
N.J., office. Torsten has close to 30 years of experience
as a management consultant and in business leadership
roles. He leads the Global Change Management Practice
and has worked predominantly with Fortune 500
companies—and their affiliates in the United States,
Europe, South America and the Far East—helping them
transform their selling organizations to achieve faster
growth and superior execution. His experience also
includes sales and marketing roles with IBM and work
for the Commission of the European Union in Brussels.
Rodolfo Luzardo is a Principal based in ZS’s Chicago
office. Rodolfo has extensive experience advising
companies across industries and geographies. Rodolfo’s
expertise is in B2B sales and marketing strategy and
effectiveness, with a focus on large-scale commercial
transformations relating to go-to-market strategy, sales
effectiveness initiatives and integrations, and pricing
optimization. Rodolfo’s experience spans a diverse range
of commercial topics, including multiple sales models,
go-to-market redesign and pricing. He has broad industry
exposure spanning specialty chemical, industrial, basic
materials, distribution, retail and private equity.
Namita Kalyan is an Associate Principal based in
ZS’s Philadelphia office. She is the global lead for the
Sales Force Effectiveness Practice and her focus
has been in sales force strategy, design, and
effectiveness. She has worked with Fortune 100
companies to evaluate and improve sales manager
and rep effectiveness, including multi-country sales
force training.
Eric Scott is a Manager based in ZS’s Toronto office. Eric
focuses on broad sales and marketing issues across
Canada and the Americas. Eric is a member of the firm’s
Sales Force Effectiveness Practice as well as a leader in
Medical Affairs Strategy and Commercial Organizational
Design. He has helped many clients with maximizing
go-to-market strategies through market insight and
sales strategy, forecasting and opportunity assessments,
sales operations and incentives, and business technology
and business sales automation.
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15. About ZS
ZS is the world’s largest firm focused exclusively on improving business
performance through sales and marketing solutions, from customer insights
and strategy to analytics, operations and technology. More than 3,000
ZS professionals in 21 offices worldwide draw on deep industry and domain
expertise to deliver impact where it matters for clients across multiple
industries. To learn more, visit www.zsassociates.com or follow us on
Twitter (@ZSAssociates) and LinkedIn.
