Sales Force Effectiveness


In a recent survey “60% of Chief Sales Officers (CSOs) reported that, their number one priority was to improve Sales Effectiveness” according to Alinean.com and in a recent report by Deloitte “In 2012, only 50 per cent of respondents indicated they were happy with sales productivity”.

The cost of field sales is rising as is the overall competitive landscape so companies whose business model is reliant on face to face selling are now looking to move from what has been historically viewed as an ‘art’ form, reliant on intuition and personality, into a process where the inputs and outcomes are understood and reproducible, this approach is commonly known as ‘Sales Force Effectiveness’ (SFE). In the world of acronyms, other terms often used in the same sentence as SFE are Sales Performance Management (SPM) and Sales Force Automation (SFA); an overview of these terms is given below before exploring SFE.

Gartner describes SFE as ‘The focus on the tasks and processes of selling’ – the individual tasks and activities a salesperson uses to develop opportunities which are supported through SFE applications and tools. SFE tools should help both managers and sales people optimise and improve the impact of their behaviours on the outcomes in the sales cycle. SPM and SFA form part of the SFE tools.

SPM is the marrying of activity data with business improvement processes in order to drive sales effectiveness. At its core, and the focus of most tools, is the practice of incentive compensation management. SPM is often combined with other tools/approaches, such as activity management, customer focus, territory & quota management, analytics, and coaching.

SFA is used interchangeably with CRM; however, CRM does not necessarily imply automation/focus on sales tasks. In reality there are few if any SFA vendors left and SFA has been consumed within CRM offerings.

Other tools/ areas which should be included within SFE include: Pricing, Territory Management, Sales Training/Coaching, Reporting/Analytics and CRM.

One of the biggest historical challenges in sales management is that many decisions and actions, including investing in tools and training, are made without a clear understanding of their expected impact and how the tools will help achieve this.

Remember you cannot manage the outcome only the input.

SFE Framework: a suggested methodology to start an SFA project

SFE Framework: a suggested methodology to start an SFA project

Diagnosis

It is the author’s experience that despite the move towards the appliance of science, many organisations miss out a diagnostic phase either because of a lack of data or because historically frameworks and methodologies were not readily available, yet undertaking a fact based diagnosis is crucial to the overall success of any SFE project. By example, if you do not know current customer coverage and the impact of that coverage how can you determine if this is important and if so at what level.

Example: A bank’s Mortgage Sales team calling on ‘introducers’; the introducers were graded A-F based on revenue. We compared contact rate against revenue and the results showed that if the introducer was not seen at least 6 times in a 12 month period the probability of down trading rose by 50%, however if they were seen more than 15 times there was no probability of up trading. Before the insight, contact with introducers ranged from 0-60 times per annum. Based on this the strategy and KPIs became easy to identify and action.

Strategy

After analysing the inputs and outcomes from 11 million field sales visits across 9 countries and many industries including Financial Services, FMCG and Pharma we have only seen 6 basic strategy choices/levers (6 Ps) that managers can execute:

  • Productivity
  • Performance
  • Prioritisation
  • Product
  • Place
  • Process

Which choices you focus on is based on which underlying challenge your organisation is trying to address, identified from the diagnosis.

A basic formula which breaks the key behaviours into drivers of sales revenue

A basic formula which breaks the key behaviours into drivers of sales revenue

Metrics/Behavioural KPIs

YOU CANNOT MANAGE THE OUTCOME!

Many sales leaders do sales forecasts based on last year’s performance, plus the growth rate envisaged by the CEO, the reality is as directors and managers the only things we can manage is the activity, focus and behaviours of our field sales teams, and it is these activities and behaviours that will ultimately lead to revenue.

The chosen KPIs should let us know how we are doing in managing the chosen inputs in a time frame that lets managers manage, influence and change. We have identified 36 main KPIs which relate to the 6Ps.

The validity and timing of the KPIs are also crucial and where many organisations fail, the input data from the field needs to be quantitative and in real time, if you are measuring prospect calls, if you get the number on a Friday you cannot get the week back to try again! Choosing the right tool for sales management is critical, often companies try to repurpose CRM but this focusses on qualitative data and with a significant time lag.

Below are 2 examples within SFE which use data/information to drive performance improvements.

Example 1: Company 1 used to take 6 months to identify sales people who were failing, and often at this point they had ‘gone native’ so had to be let go, losing 6 months of sales effort plus salary and recruitment costs. Analysis showed that the best predictor of sales success was behavioural KPIs i.e. what and how much they did, and these behaviours were set in the first 10 days if not challenged. By using real time field reporting to diagnose failing sales people, the company could and did intervene and reduced failure rates and increased sales.

Example 2: Company 2 identified that typical account coverage of allocated customers was <50% and the customers that had not been contacted were key customer groups. It was decided to allocate sales resources as follows across each 12 week cycle: Top 20% customers by value, Top 20% customers by growth, Top 20% customer fallers, 20% equivalent of prospect calls and 20% equivalent of free choice by the salesman. Each salesman used a field reporting tool and each night they were provided with summary metrics and details of outstanding customer calls. Within one cycle, coverage had exceeded 90% and revenues grew by >20%.Example 1: Company 1 used to take 6 months to identify sales people who were failing, and often at this point they had ‘gone native’ so had to be let go, losing 6 months of sales effort plus salary and recruitment costs. Analysis showed that the best predictor of sales success was behavioural KPIs i.e. what and how much they did, and these behaviours were set in the first 10 days if not challenged. By using real time field reporting to diagnose failing sales people, the company could and did intervene and reduced failure rates and increased sales.

Actions

The actions that can be taken within an SFE framework draw from the range of existing interventions such as training/coaching, territory planning to name a few of the more popular ones, the difference comes from application of the diagnostic phase and the definition of success and associated KPIs. Using the old adage, what gets measured gets done!

Data from i-snapshot shows a high correlation between the use of i-snapshot, as measured by system access time and frequency by a sales manager, and the improvement in the performance of his team.

Tools

The choice of tools should be the final decision in implementing SFE, the tool should be selected against a clear understanding of the data they can/will produce and how managers will use that data to drive performance. There is not one single tool in SFE but a range of tools depending on the outcome of the investigation process, key areas and sample tools for those areas include:

Alan Timothy; focuses on the science of sales

Alan Timothy; focuses on the science of sales

 

Article kindly provided by guest author Alan Timothy of  i-snapshot for our February 2013 newsletter.

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