The Five “Rs” of Sales Force Effectiveness
There are five things that a company and its sales force must do right to gain and hold market share, close profitable client arrangements and effect long-term sales relationships. These are both simple and intuitive. They are:
- Offering the right product to the customer or prospect;
- Calling upon the right customer;
- Applying the right amount of energy to the customer and their sales process;
- Having the right sales person in the customer’s building; and
- Doing the right things during the sales call or process.
Let’s consider each of the above and how a CEO or senior executive can have an influence:
- Offering the right products—what does the customer need (that you can supply or sell) to conduct their business? This is generally the province of the marketing wonks with a bit of engineering thrown in depending on the technology of the product or market. This determination is absolutely fundamental to (and part of) any successful business strategy. Of course in truth, most companies we know start with a product and thenare looking for appropriate customers—not the reverse.
An exception to this is the common practice of extending your product line for current or prospective customers. For example in the software industry, sellers quickly identified that their prospective customers not only needed new software code, but also the unique expertise to install the product and customize it. Hence, they (or their partners) began to supply software “bundles” that included both the code and the expertise to make it work fast. This product expansion can (and has) changed the way some software products are sold.
- Calling on the right customers—who are the key customers who can or will buy your product or service? Key is the operative term here. My definition is the 20% of customers and prospects who will account for 90% of market demand, and ultimately your sales. That is pretty straight forward analysis and marketing—e.g.: a function of: SIC code, company size, untapped demand and achievement of “par” mix. In recent assignments, we have helped two different clients identify those customers (listed by name, location and upside opportunity) where their sales forces should spend the vast majority of their time for the greatest potential reward. In both cases over $20 million of sales opportunity was on the table. You would be surprised at how many companies cannot identify key customers, prospects and opportunities, other than by glancing at a recent sales-history report and pointing at the top company. Good start, but it is an analysis model that will generally lead you to failure or to great risk.
- Applying the right amount of energy (NRG)—sounds a little like physics, doesn’t it? Well, in some ways it is. It refers to having a simple sales plan for each and every account or prospect assures that they will get the right amount of attention required to bring out their full potential in terms of sales or product share. What do we mean? It is as simple as saying that a key customer or prospect (sales potential over, say, $250,000 whether achieved or not) should be called upon (“engaged” may be a better term) no less than monthly and a non-key account (with much less potential) no more than twice a year.
Understand there are often many degrees to such a sales plan. Is this complicated or time consuming? No! Once you have defined key accounts (and degrees thereof), creating a draft sales plan takes a spreadsheet of customers, an hour of work and a bit of courage with your sales force to honestly confront the realities of their sales territory or portfolio. What does this yield? An annual calling and customer-contact plan is created for your sales representative—against which they can be measured. And, this sales plan can also be used to answer these evergreen and vexing questions:
- How large a sales force is needed to meet management’s expectations—in terms of sales calls & reps?
- How large a sales territory or account base can each and every sales rep cover—to your (not their) expectations?
This is an introduction that leads us into the area of sales-force logistics, which I believe is one of the most ignored sources of opportunity (and sales volume increase) available to the CEO and sales executive today.
- Having the right sales resource in the customer’s building—we find it is crucial that a company deploy the correct sales-success profile as is required by its selling process. A sales-success profile is that innate set of personal strengths, personality traits and characteristics that makes a sales rep suitable to work with one type of customer (or selling situation) and not another. There are three profiles we generally identify. They best match sales process and customer as follows:
- Entrepreneur—Works best in a cold-calling or missionary environment with rapidly growing market share
- Consultant—Works best as a team leader in a key-account selling environment
- Detailer—Works best in a transactional environment—smaller orders, small and repeat transactions, and a highly service-oriented sales work product or process.
We are not talking about trainable skills here. Instead, we are delving into such esoteric matters as personality, and risk tolerance. As a first step, a CEO must be sure that their sales managers know the correct sales-success profile needed for their company (or sales channel) and are actively selecting and hiring the right sales resource for the job. This means sales management and HR must be on the same page on this matter and have an objective way to define and measure the sales-success profile. Sound tough? It is not. I have a client who uses a simple personality-profiling instrument to screen potential sellers and anybody else who walks in the door. It takes about 10 minutes to do and it works for them. Of course, some of my clients would look at me askance at me for the mere mention of such techniques.
- Doing the right things—when experienced sales reps are hired the company most often assumes that that they are competent and well trained in the skills of selling. That very often is not the case. In our August 2009 E-Noteswe made the case for hiring high-quality candidates and the application of sales-skill training on the basis of financial ROI and employee “breakeven.”
Here we will provide a different dimension to that analysis. In short if your sales rep is not strong in all areas of selling skills, you can nail all of the other four Rights and still be unsuccessful because of sales-force failure. What a waste of investment dollars! What to do? Know the sales-skill inventory of every member of your sales team (including sales managers) and invest in plans to fill the “gaps.” One person in your HR Department should have primary responsibility to build or fix skill inventories in the sales force—and everywhere else in the organization.
I have spent about 1,000 words on this subject so far. Want to apply Wilkening & Company’s quick litmus test? Hang on and ask 3 questions.
- Can you name your key customers and prospects (or look at a list of them) and do they really have the potential for 90% of the market sales and revenue within the next 24 months? I said potential here, not just current sales achievement. Tune out opinions and look at the data first.
- How many face-to-face sales calls does every sales rep make each year—later with the averages—you want the actual number for reach sales rep?
- What is the sales-skill inventory of ever rep on your staff, and how much is being spent on sales skill training this year? [BTW—Product training does not count.]
If these questions cannot be readily answered by sales leadership or staff, you have a problem—maybe a big one.
We plan to talk more about the five Rights during the months to come.
Did you know?
Wilkening & Company has helped a number of clients prepare annual sales plans and design effective sales territories. In doing original research regarding sales-territory design, we have found that it is not unusual for a company to lose 15% of its customers from year to year—in a stable economy. Whether 15% turnover is right or not for your company, you need to act on this reality. What to do? We advise clients to assure their annual sales plan builds in enough sales calls on prospective customers to backfill for the annual loss of current customers. Start with 15% extra this year, and then measure real customer turnover in 2010. You really cannot lose by calling on new accounts.