Are You Paying Enough Attention to Your Sales Force?
There’s a question all top managers should ask: How can I make my sales force, which is one of the biggest and most important investments my company makes, perform more effectively?”
There are several reasons that question is so important.
Sales forces are expensive. Despite predictions by some pundits that many sales jobs would disappear due to the Internet and “big data”, companies continue to invest in sales forces in a big way. According to Selling Power magazine, the largest companies in America selling products such as computer and office equipment, consumable goods, insurance, telecommunications, and financial services, each employ tens of thousands of salespeople. By our estimates, the amount invested in U.S. sales forces exceeds $800 billion a year. This is 4.7 times the estimated $169.5 billion spent on all media advertising in 2012 and more than 20 times the estimated $39.5 billion spent on Internet advertising in 2012.
Sales forces are empowered. The significance of a sales force goes beyond its cost. The sales force is perhaps the most highly empowered organization within most companies. Usually working alone and unsupervised, salespeople are entrusted with a company’s most important asset — its relationship with its customers. To many customers, the salesperson is the company. As customers face a proliferation of buying choices, the way a company sells becomes a key point of competitive differentiation and a source of customer value. This makes an effective sales force essential for driving top-line performance.
Sales force dynamics are complex and poorly understood. Managing a sales force requires many difficult decisions. For example, you need a sales strategy defining which customers to target, what value proposition to offer, and what sales process to use to engage customers and create mutual value. You need to decide what sales force size and structure best allows you to meet customer needs and achieve company goals. You need to choose who to hire for the sales team, and how to continually develop sales team skills and knowledge. And you need to determine the goals, incentives, and sales culture that will motivate peak sales force effort levels and performance.
Many companies today are taking a more strategic and data-driven approach to making all of these and other sales force decisions. But regrettably, our understanding of what drives sales force success still falls short when compared to the cost of force and the huge impact that salespeople have on customers and company performance. Sales continues to be one of the most poorly understood and under-optimised areas of business. Compared to marketing, the number of good books and academic articles in the sales force space is woefully inadequate…Less than 1% of undergraduate institutions in the U.S. offer a major or minor in sales and none of the top 20 graduate business schools offer a concentration in sales for their MBA students.
Improving sales force management is a huge opportunity. We believe that sales force improvement initiatives typically produce incremental short-term revenue gains of at least 10%, and long-term increases of 50% or more. Consider the following examples of companies that have implemented sales force improvement initiatives that had big positive bottom-line impact.
- A business within GE that leases over-the-road trailers sought to refocus sales efforts to improve productivity. Leaders invested to develop better measures of customer potential. In just one year, qualified leads increased by 33%. The customer potential data also helped GE redeploy several sales territories into more lucrative markets, allowing the business to grow sales productivity by 7 percent without adding people.
- Global healthcare company Novartis identified a group of outstanding performers in its U.S. sales force, and isolated a set of “success principles” and behaviours that differentiated their performance. Leaders developed a new sales process based on these success principles and behaviours, and aligned sales hiring, development, and other programs to support the new process. The initiative contributed to six consecutive years of double-digit top line growth, well above the industry average.
Temporary housing provider Oakwood Worldwide transformed its sales force to align better with customers’ need for a more consultative sales approach. This involved a new sales force hiring profile, training program, coaching process, and sales enablement tools and metrics. A large percentage of the sales force did not survive the transformation, but most top performers did. A year after implementation, deal win rates had tripled, sales cycle time had dropped by 50%, and salesperson turnover had declined to under 5%.
More research and education on sales, and continued work to develop and refine frameworks for understanding the drivers of sales force effectiveness can make a significant business impact in the years to come.Share on LinkedIn