improving sales force performance and effectiveness

Improving Sales Force Performance

The materials contained in this document are intended to supplement a

discussion between Chief Executive Network and L.E.K. Consulting on

November 21, 2013. These perspectives are confidential and will only

be meaningful to those in attendance.

L.E.K. Consulting llc, One North Wacker Drive, 39th Floor, Chicago, IL 60606, USA

T: 312.913.6400 F: 312.782.4583 www.lek.com

November 21, 2013

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© 2013 L.E.K. Consulting LLC. All rights reserved.

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Agenda

Agenda

Introduction to L.E.K. Consulting

Key selling effectiveness pain points

Critical levers for sales force effectiveness

Closing statements


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Common Sales Force Challenges:

Prioritization of

target markets

Difficulty in

articulating a

company’s value

proposition

New Lead

Generation

Sales

Conversion

Customer

Retention

Sales Strategy

& Channel

Alignment

Low sales pipeline / chasing the wrong leads

Low win rates

Internal support break downs (e.g., slow response to customers,

operational handoffs, etc.)

Customer or star sales performer defections

Poor account management – lost opportunities to grow share

Sales Organization & Management

Performance Measurement

Systems & Tools

Sales Force Performance Culture

Sales Force Enablers:


Source: CSO Insights, L.E.K. Consulting © 2013 L.E.K. Consulting LLC. All rights reserved.

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0

40

30

20

10

60

80

100

90

50

70

Number of employees

<50

100-499

500-999

>1,000

Title

Senior executive

(e.g., VP Sales)

Sales manager /

director

Marketing manager /

director

Demographics of survey respondents

n=48

Percent of respondents

HR manager /

director

Industry

Manufacturing

Hospitality & Food Service Consumer Products

Other*

50-99

Note: *Other includes transportation, technology, healthcare, consulting & professional services and others © 2013 L.E.K. Consulting LLC. All rights reserved.

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Review of our survey results (I of III)

40 0 30 20 10 50

21%

We have a formalized value proposition

that is very compelling to our prospects

Our sales pipeline is clearly aligned

with our sales priorities - we are not

chasing the wrong sales opportunities

We always review the results of our

solution with strategic accounts 29%

We clearly understand our customers’

issues before we propose a solution

33%

Sales and Marketing are aligned in

what our customers want and need 40%

44%

Selling Process

Percent of Respondents rating 6 or 7*

Note: *Please rate your level of agreement with each of the following statements on a scale of 1 to 7, where 1=

strongly disagree and 7= strongly agree © 2013 L.E.K. Consulting LLC. All rights reserved.

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Review of our survey results (II of III)

People & Organization



strongly disagree and 7= strongly agree

50 40 30 20 10 0

Our organization is highly effective in allocating

the right resources to pursue large deals 31%

Our management team is highly effective in helping

our sales team advance sales opportunities 38%

We know why our top performers are successful

We leverage the best practices of our top

performers to improve everyone else 19%

Our sales team focuses most of their time on actual

selling activity rather than non-sales activities

such as administration and customer service

21%

48%


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Review of our survey results (III of III)

Systems & Metrics



strongly disagree and 7= strongly agree

50 40 30 20 10 0

Our sales management team is highly confident

in the data available from our CRM system 19%

Specific criteria have been established to

define a strategic account in our company 29%

Our sales compensation policies are

aligned with our business objectives

In an average week, our sales force definitely

spends sufficient time with customers 19%

35%


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Solution sales

(incl. ROI/TCO)

Proposal and

pricing

Negotiation and

closing

Account

planning

Account

maintenance

Customer upsell

Win-back

Sales Organization & Management (incl. sales ops and comp)

Performance Measurement

Systems & Tools

Sales Force Performance Culture

Content marketing

& program focus

Lead generation

and qualification

Pipeline

management &

forecasting

Innovation

Sales Strategy Definition

Key

Sales

Areas

Sales

Force

Enablers

A holistic view of the sales function is necessary in order to identify

and capture sustainable performance improvement opportunities


New Lead

Generation

Sales

Conversion

Customer

Retention Sales Strategy &

Channel Alignment

Sales Process and Management Improvements

Market strategy

Sales-led

growth strategy

Channel alignment

and growth strategy

Customer and

channel value

proposition

1 2

3


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Sales Strategy Definition: Companies often face challenges

prioritizing target markets and optimizing resources to penetrate them


Lack of understanding of target

markets, customer needs and

competitive differentiation

Opportunistic sales

Lack of understanding of sales

drivers

Misaligned resources

Changing market dynamics that

lead to conflicts between the

company and its channel partners

Difficulty in articulating a

company’s unique selling

proposition

Common Challenges Key Questions to Consider

Can management demonstrate an in-depth

understanding of its target market segments and

how it best meets customer needs?

How much time do Sales Reps spend on core

markets vs. opportunistic sales?

Can management demonstrate the ROI from sales

team investments on growth and profitability?

Do growth and Sales plans reflect this

prioritization?

Has the company’s share of key channel partners

deteriorated? Have channel partners shifted their

alliances?

How clear is the value proposition? Can sales,

channel reps and key supporting team members

clearly and consistently explain it?

1


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It is critical to have the sales model in place that best reflects the basis

of competition and aligns with the strategy and value proposition


Little / No Customization Not Technical High Customization Highly Technical

Hig

hly

Dif

fere

nti

ate

d

Hig

hly

Co

mm

od

itiz

ed

Deg

ree o

f D

iffe

ren

tiati

on

Product / Service Complexity

Sales Models: Degree of Differentiation vs. Product Complexity

Solution Selling Model

Unique needs based

High touch selling and support (e.g., mix

of direct and technical sales reps)

Success requires ‘challenger sales’

versus relationship sales talent and focus

Coverage Selling Model

Needs based

High touch selling and support

(e.g., direct sales)

Example: Pharmaceuticals

Low Cost Coverage Selling Model

General needs based

Low touch selling and support (e.g.,

inside sales, partners, web, etc.)

Example: MRO supplies

Mixed Coverage Selling Model

Needs based

Low touch selling and support (e.g.,

direct, inside sales, partners, web, etc.)

Example: Enterprise hardware


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Sales Process and Management: Sales process and capability

breakdowns may appear isolated and minor when viewed on an

individual basis, but can have a significant aggregate impact


Sales training programs fall short in

preparing sales reps to be effective in their

roles

Sales and channel reps have trouble

determining qualified leads

Informal allocation of qualified leads to sales

regions or channel partners

Lack of formal customer feedback

A ‘one size fits all’ process to support sales

reps complete proposals

Sales reps have limited authority to negotiate

prices

How varied is individual sales rep performance? How

varied is individual channel performance?

Are reps pursuing opportunities that are misaligned with

targeted sales?

Is there a real-time feedback loop from the Sales team

on potential customer needs?

Are sales opportunities all treated equally?

Do customers complain about Sales Reps’ inability to

make a timely decision on a request?

Is there a real-time feedback loop between Sales and

Operations on order fulfillment and delivery?

Does the Sales team know which customers and

customer segments drive sales and profits?

2



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Sales Force Enablers: High performing sales teams are structured

to draw support from across the company to achieve sales goals


Channel marketing, development and

management are out of alignment

Sales force structure, size and territory

coverage are out of alignment

Cross-functional links are not strong

between Sales and support functions

Performance/sales metrics and targets are

not aligned with drivers

The sales force compensation plan is

misaligned

Sales operations/support do not provide the

necessary leverage to the sales force

Culture does not effectively support sales

performance and promote accountability

Can management demonstrate the economics

associated with the sales force model and current

performance?

Do support functions view the sales function as a

‘customer’?

Do the sales performance measurement systems

provide frequent, actionable feedback?

Does the sales force compensation plan reward Sales

Reps and managers for the desired outcomes?

Can sales reps access the right information at the right

time while selling and serving customers?

Are sales rep ‘stars’ celebrated? How are laggards

supported to improve performance?

3


Highlighted on the next page


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The overall sales force compensation plan must align to the

business strategy


Sales Force Compensation

Plan Design Elements

Level of Pay

Fixed vs.

Variable

Performance

vs. Payout

Plan

Administration

1

2

3

4

Guiding Principles for Administering a

Sales Force Compensation Plan

Keep the compensation plan simple; complex

plans can be interpreted differently and lead to

unwanted behaviors that were not foreseen when

the plan was designed

Provide the sales force with a simple tool to use to

calculate their anticipated compensation

Include sales management control provisions to

adjust for windfalls, which can set unrealistic

expectations and make the sale force

uncompetitive in the long run

Include transition features in the sales force plan to

account for new salespeople, key account

changes or the launch of a new product

Make sure the data collection process and tools

are in place to facilitate timely, accurate reporting

3


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In our experience, sales force effectiveness projects can quickly

accelerate sales growth and profits


Analysis and benchmarking of the sales function status quo vs. best

practices in order to gain a clear view on the current situation

Identification of specific, actionable opportunities to drive sales performance

improvements

An assessment of the potential financial gains that can be captured through

sustainable improvements in the sales function

Detailed activation plan that prioritizes ‘quick wins’ to minimize project

payback period and maximize ROI

Objective, independent perspective on the key success requirements, risks

and internal change management issues to drive successful plan execution

and benefit realization

Typical Benefits


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A Business Process Outsourcing (BPO) company, was struggling

with its sales force and needed to quickly turn around its

performance to ensure its survival

Company Situation

A BPO organization was experiencing significant problems

with its sales force and its ability to generate revenue growth

and retain customers. Specific issues included:

– Declining market share

– Operationally and internally focused organization

– Mixed ability to articulate to customers its value

proposition

– Difficulty in cross-selling, up-selling, and targeted solution

selling

– Decentralized regional / country structure

The revenue growth pressures, combined with a significant

debt load, put tremendous pressure on the company to turn

around its performance quickly, but also on a long-term

sustainable basis



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Major workstreams centered around the design and implementation

of necessary and dramatic changes in the company’s sales approach

and organization


Identified new opportunities to increase selling capacity without adding

resources

Set up a Sales Transformation Office that defined work streams, mobilized

teams and pushed out across the organization the right sales priorities for

the business

Designed a new sales organization that better aligned with the company’s

strategy and need to drive sustainable revenue growth

Renewed focus on growing the pipeline and improving win rates on new

business / renewals

Major Workstreams


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The company achieved early sales wins and established the

right foundation for long-term sales performance improvement

Results

Benefits included:

– Increased senior management’s focus on the sales force and generating

revenue growth

– Grew the sales pipeline and increased the win rate for both existing and new

customers

– Brought on several new hires for key sales leadership roles

– Began to turn around the culture to be much more customer centric and

sales focused

– Generated momentum to complete sales force transformation

Within three months of implementing the recommendations, the company

experienced significant, measurable sales improvements

– This included growth in the sales pipeline (up 50% y-o-y) and win rate (up

74% y-o-y)



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Closing statements:

Closing statements

The recovery is providing

opportunities to reinvest in

sales capabilities and areas

that may have been

constrained during the

downturn

Companies should approach

sales force effectiveness

improvement as a cultural

change to reinforce sales


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Contact information

L.E.K. Contacts


Chris Kenney Managing Director

L.E.K. Consulting One N. Wacker Drive Suite 3900 Chicago, IL 60638

T: 312.913.6409 [email protected]

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