Managing The Upside: It’s 2 P.M.—Do you know where your sales force is? [Part 3]
What have we have accomplished in the first two sessions of this discussion? There are two things—
- In April we created a methodology and approach for determining which are the RIGHT companies or accounts for your company to call upon; and
- In May we applied some common-sense rules to determining how much sales-force Energy is required to be applied to the RIGHT accounts, and every account or territory. Further, we have also developed a methodology and yardstick that can tell us whether we have a large-enough sales force to get this job done.
As a final step in this process, we will now consider the impact of prospective accounts and account potential on required sales-force Energy, and compare them to the conclusions that we drew in May.
As you will recall from our May discussion, the amount of required sales-force Energy (or work) is often determined as a function of current account sales volume. For example, a reasonable call plan might look something like the following:
- Large-sized accounts (A’s) in sales volume—12 sales calls annually;
- Moderate-sized accounts (B’s) in terms of sales volume—6 sales calls annually;
- Smaller-sized accounts (C’s) in terms of sales volume—2 sales calls annually; and
- Very-small accounts (D’s) in terms of sales volume—1 sales call annually (or less).
But, this does not consider the upside potential of the account—it only reflects its current demonstrated sales volume. That can be a major oversight. As we suggested in April, we believe that a company should categorize all of its accounts according to both current sales volume and potential using a similar ABDC methodology again. What will result is a two dimensional category for each account—one for current realized sales volume and one for future potential. So, you might find a large-sized “A” account in your company’s portfolio that has very-limited upside potential Hence, your sales force has gotten the entire share available from this account. Some would call this a “maintenance” situation.
The rule based on volume (only) suggests you should call upon this “A” account 12 times per year, but does that make sense for an account with such limited potential? In short, how many calls per year should such an account receive?
We believe there is a common-sense way to answer this question. The following table has been developed to consider both volume and potential when deciding upon the number of annual sales calls needed for each account. For the example account mentioned above, these rules suggest that 6 calls per year are adequate instead of the 12 originally suggested based only upon volume. (See chart below)
With these revisions for account potential considered, a company can then “re-plan” the Energy it will require from its sales force in the coming year. Of course, these are guidelines, and actual account needs will dictate the required actions of the sales force.
But what about prospective or new accounts, upon whom the sales force does not currently call? What is the impact of these prospects on sales-force planning?
Now, you could do a large planning exercise to determine the upside potential of prospective and un-called-upon accounts. And, that should be accomplished in due course. However, we have found (with some empirical basis) that a company can apply a general rule-of-thumb to the impact of prospective accounts on the activities of its sales force. As a general rule, we suggest that 15% of annual sales all should be set aside for prospective or new accounts. These calls should be mandatory and serve to replace the current accounts you will surely lose throughout the year. This means that if you do not make cold calls on new accounts during the year, you have a real risk of losing market share.
What are the implications of using a15% assumption? Remember in May we estimated that a sales-call capacity of 750-800 calls per year was possible considering the four assumptions (total available hours, average call duration, percent of time spent in travel and slack time) used in the example. If 15% of these annual sales call must be used for perspective or new accounts, only 640-680 annual sales call are then available for calls upon current accounts. See the impact on the revised chart we created in May (shown below).
What we have done in the above chart is add 110 annual cold calls to the sales plan of each of the four sales territories shown. The horizontal line shown reflects 750 possible annual sales calls. Do you agree with my decision to add the 110 cold calls to the Right-sized Territory atop the planned workload? Is it right to stretch that sales rep by that many sales calls? (Call and I will explain why it is.)
Are you tired of looking at numbers? I am! So let me summarize in a few words what we have accomplished. Using the simple steps that we have outlined over the last three months, you are now equipped to take your sales force from:
- Unfocused activities to specific account plans;
- Purely geographic sales territories to portfolios of accounts and packets of work;
- Spending time with favorite accounts to serving and satisfying important accounts;
- Doing what they believe is important to what you both collectively agree is important;
- Opacity to transparency; and
- Breakeven to profitable.
Frankly, it takes more time to talk about than it does to do it. Begin assessing account potential and sales force Energy requirements today. You won’t regret it.