SALES BOOST – BREAKING THE CURVE Whitepaper by Quartz+Co
www.quartzco.com
DENMARK Ryesgade 3A 2200 Copenhagen N +45 33 17 00 00
SWEDEN Birger Jarlsgatan 7 111 45 Stockholm +46 (0)8 614 19 00
NORWAY Inkognitogata 35 0256 Oslo +47 22 59 36 00
CONTENTS BREAKING THE CURVE ........................................................................................................................................ 2 STEP 1: DIAGNOSE SALES FORCE EFFECTIVENESS ................................................................................... 2 STEP 2: REFOCUS AND CASCADE SALES ACTION PLAN ............................................................................. 2 STEP 3: ALIGN PERFORMANCE INDICATORS AND INCENTIVES ................................................................. 2 STEP 4: ASSESS SALES FORCE WILL-SKILL .................................................................................................. 3 STEP 5: ENGAGE THROUGH PERFORMANCE COACHING ........................................................................... 3 ABOUT THE PROCESS ......................................................................................................................................... 3 WANT TO KNOW MORE? ...................................................................................................................................... 4 OUR SERVICES ..................................................................................................................................................... 4
1
BREAKING THE CURVE While most companies focus on cost cutting, some also take a hard look at opportunities to optimise the sales effort and conquer market shares, even in a declining or stagnant market. No doubt everyone agrees we are in the middle of a severe economic downturn – some say the worst ever registered. Paul Krugman, Nobel laureate in economics, has named 2009 the “Year from Hell”.
drivers (as illustrated in figure 1). The framework does not only focus on the skills of sales people but also on the strategy, processes, organisation structures, performance management approach, and tools and systems that the sales operation is based on. Figure 1 The Quartz+Co Sales Force Effectiveness Diagnostic tool Sales strategy
However, the economic downturn also has upsides since companies have a unique chance to exploit the weaknesses of competitors to conquer market shares in a declining or stagnant market. Of course, many companies have seen this and are attacking the markets more aggressively than before, relying on the skills of their best sales people. However, relying only or mainly on existing top performers is not necessarily a good idea since top performers are often a scarce resource and cannot take on more customers. Although finding and hiring good sales people may become easier, this is probably not an option right now. Therefore, companies have to focus on how to improve the effectiveness of the entire sales force to capture market shares and boost sales. Adapting to the new market reality should happen fast – 2009 is not the year for long, drawn-out sales turnarounds. In order to do so, Quartz+Co recommends a five step process to drive sales performance:
Diagnose sales force effectiveness Refocus and cascade sales action plan Align KPIs and incentives Assess sales force will-skill Engage through performance coaching
Each of the steps will be further explained and discussed in the rest of this whitepaper.
STEP 1: DIAGNOSE SALES FORCE EFFECTIVENESS In order to adjust the sales strategy and approach, we first need a good idea of the possible improvements in sales force effectiveness. The Quartz+Co Sales Force Effectiveness Diagnostic tool provides a framework for assessing a company’s sales performance based on six key
Sales force competences
Processes
Sales excellence Sales tools and systems
Organisation
Performance management
The examination of the current sales operation will reveal some or many improvement areas – lessthan-optimal sales processes or methods used by the sales force. Of course, it is also important to identify and capture good practices in order to be able to use them later when adjusting and implementing the new sales strategy and approach. The Sales Force Effectiveness Diagnostic tool should aim at supplying sales management with hard facts about current profitability and growth of customers and segments, the opportunities and potential of customer and segment, and which customers and segments the sales force spends time on. However, it is important for speed and momentum to leverage the collective knowledge and experience of the sales management team. Improving the quality of the analysis is rarely the problem. The necessary outcome of the process is not analytical insight but determination to act.
STEP 2: REFOCUS AND CASCADE SALES ACTION PLAN The findings from Step 1 are used as input to subsequent work with defining how to improve the sales efforts in a fast and lasting way.
2
The improvements will typically be a mix of concrete sales actions directed at the market (e.g. new focus segments, new or adjusted offerings, improved customer tactics, etc.) and organisational development initiatives (e.g. improving the dialogue between sales and customer service in order to get a better picture of a customer, or motivating the sales force to register how they spend their time in order for them to use it as input for coaching sessions and for a better prioritisation of time).
As such, performance indicators and associated incentives play a key role in driving the desired behaviour in the sales organisation. However, companies often struggle to get their performance indicators to do just this. In many cases, companies find that their performance indicators and incentives actually inhibit the desired behaviour (e.g. keep a sales person from pursuing an opportunity because she is not measured and rewarded on sales to the specific customer).
The agreed actions (including those from the existing sales strategy) are best captured in a salesaction-plan-on-a-page including objectives, goals, actions, and deadlines. This plan should subsequently be cascaded to each individual in the sales organisation so that everyone knows their exact contribution to the overall sales action plan.
Performance indicators can be divided into two main types:
Figure 2 One-page Sales Action Plan Objectives
Activities
1. ...
1. Focus area • ... • ... • ... 2. Focus area • ... • ... • ... 3. Focus area • ... • ... • ... 4. Focus area • ... • ... • ...
2. ... 3. ...
Goals Q1/Q2
KPI 1 KPI 2 KPI 3 KPI 4 KPI 5
Q3/Q4
2009
Deadlines
The benefit of creating and cascading the one-page Sales Action Plan-on-a-page is that it forces management to be clear and focused in the communication of the sales strategy. Furthermore, the one-page Sales Action Plan has the added benefit that sales people and sales managers all have a good basis for subsequent follow-up and coaching by their immediate manager.
Performance indicators that measure outcomes (e.g. revenue, customer satisfaction, number of new customers, etc.) Performance indicators that measure sales effort in terms of quantity and quality (e.g. number of sales calls, number of new opportunities identified)
While outcome based indicators typically provide good key performance indicators (KPIs) to which incentives may be tied, effort indicators are important for performance coaching, but when used as KPIs they often result in gaming or even manipulation (e.g. registering bogus sales calls or opportunities). Figure 3 Performance indicators are an important tool in implementing and ensuring the success of new sales initiatives and strategies Outcome
Effort
Customer satisfaction
New customers (net)
Number of business review meetings Number of business dev. meetings Percentage of budget booked at kickoff
Gross sales (forward orders)
Percentage of order by week X Number of repeat order meetings Gross sales (repeat orders) Repeat order hit rate
Net sales
Average discount, per cent
STEP 3: ALIGN PERFORMANCE INDICATORS AND INCENTIVES Performance indicators (and key performance indicators) function as management information to measure and track performance of the sales force and the sales initiatives that are executed; as a basis for coaching sessions between sales managers and sales people; as guiding tools for the sales people, telling them how far they are in achieving their goals.
Although a good sales scorecard should be easy to understand, designing a good sales scorecard from Chief Sales Officer to sales person that links with the sales strategy and drives the desired behaviour involves some complex considerations. But as a rule of thumb, performance indicators should always: Support what is to be achieved Be accepted – both conceptually and in terms of the actual targets and values measured Easy to
2
measure Possible to track over time, making it possible to register and measure progress
Figure 5 Implementing a Sales Pulse helps managers turn the focus of the sales force to execution Weekly meeting
STEP 4: ASSESS SALES FORCE WILL-SKILL Although sales force effectiveness is the result of much more than the skills of sales people, an assessment of sales force will and skill is none the less important to shape the team. Figure 4 A will-skill assessment gives a good overview of the sales force and the coaching and development challenge
Specific knowledge
Trends
Customer actions
Strategic actions Coaching
High
Inspired
Soaring
... invest
... sustain
Doubtful
Capable
... decide
... confront
Will
Low
Diagnosing
Skill
High
This will-skill assessment is used to guide coaching and development of each sales person so that they are able to execute their sales plans – or ultimately to determine whether to keep the sales rep or not. Based on a rough will-skill assessment, development and coaching actions need to be defined so that sales managers are clear about their task in relation to each sales person.
STEP 5: ENGAGE THROUGH PERFORMANCE COACHING The most important part of the success rate of the implementation is the way management follows up on the actions in the sales action plan. This is done most effectively through a coordinated schedule of frequent 1-to-1 performance coaching sessions. We call this follow-up structure the Sales Pulse.
These sessions should be held bottom-up so that sales people meet with their managers, these managers in turn meet their managers, and so on. In addition to providing a chain of coaching sessions which makes it harder to cancel coaching sessions (this is what many sales managers feel most inclined to do when things heat up), the chain also ensures rapid feedback on what is really happening at the customers’. The big opportunities, challenges, and trends are brought upwards in the organisation to where they can best be addressed. And so the Sales Pulse becomes a critical vehicle for adjusting and executing sales strategy on an ongoing basis.
ABOUT THE PROCESS As mentioned in the beginning, the time is not for long and very complex sales strategy crafting but for fast and effective improvements. A process such as the one described typically takes 4 to 8 weeks from diagnostic to implementation depending on the complexity of the organisation. The process is workshop driven with a high degree of involvement of sales management and other relevant stakeholders. The aim of the workshops is to establish a common understanding of why there is a need for change and commitment to what changes are needed and how these should be executed in the respective parts of the sales organisation. This ensures a fast, effective – and more importantly – consistent execution of initiatives to boost sales and conquer market shares.
3
WANT TO KNOW MORE?
OUR SERVICES
Quartz+Co is a Nordic management consulting company with global reach and is one of the fastest growing consultancies in the Nordic region. Based in Copenhagen and with offices in Oslo and Stockholm, a significant share of our business is based abroad, mainly in the Nordic countries. Quartz+Co works for large Nordic and international companies within a range of industries with spikes in retail/FMCG, media, transportation and telecommunication. We have 65 dedicated management consultants whereof 15 partners and 10 analysts and research staff.
Our range of services fall into these service lines: Strategy development Strategy execution Transaction services Commercial excellence Operational excellence For further information please visit our website on www.quartzco.com
We have built valuable experience through the projects we have managed together with our Nordic and global customers.
M: +45 61 61 30 87 E: jakob.grane@quartzco.com W: www.quartzco.com
Jakob Grane
4