Does your sales force need improvement? Are your sales effort misallocated? Below is a awesome blog from the Harvard Business Review by Andris A. Zoltners, PK Sinha, and Sally E. Lorimer.
Sales executives typically have two levers to try to increase sales: they can increase the quantity of sales effort by adding salespeople, or they can improve the quality of sales effort by investing in coaching and training.
There is a third approach that is often overlooked: Improving the allocation of sales effort. Salespeople can work smarter, not harder, by dividing their time more appropriately among customers, products, and sales activities. Sales effort allocation has a large impact on sales and profits, sometimes more than increasing the quantity and/or quality of effort.
Sales executives frequently talk about how sales forces misallocate effort. Salespeople spend too much time with “friends and family” (existing customers with whom they have rapport) instead of focusing on high-potential prospects. Strategically important products don’t get sufficient sales support. Service or other non-sales activities creep into the sales job, and role pollution prevents salespeople from developing new business. Costly allocation errors such as these are difficult to diagnose and fix.
By asking six questions (in order from the simplest to the most complex), you can trace the probable cause of any sales effort misallocation back to the sales force decisions and programs that can bring about improvement.
- Do salespeople know what’s important? If salespeople aren’t clear about which markets and products are priorities, they’ll create their own rules about how to spend time. The remedy is clear, consistent communication: “Here’s how we want you to spend your time, and here are the results we expect.” Coaching, performance management, and sales goals reinforce communication, while metrics track performance: “What gets measured gets done.” When a business logistics company wanted salespeople to spend more time selling three strategic product lines, it focused sales force attention on those lines by giving salespeople a sales goal for each line, separate from their goal for the overall portfolio. Salespeople could track up-to-the-minute achievement of all goals.
- Do salespeople have the information they need? Salespeople are more likely to spend time effectively when they have access to good information and tools. A telecom company used predictive models (think Netflix and Amazon) to give salespeople direction about how to improve sales with underperforming, high-potential customers. By finding “data doubles” for these customers — i.e., similar customers who were buying much more — the company provided salespeople with insights about which underperforming customers had significant unrealized opportunity and which sales strategies had worked in comparable situations in the past. The information helped salespeople focus on product offerings that matched customer needs, thus increasing sales.
- Do salespeople have the competencies required? When salespeople neglect priorities due to insufficient skills and knowledge, the remedy is coaching and training. A computer manufacturer selling through resellers discovered many of the resellers’ salespeople weren’t sufficiently supporting the manufacturer’s new product, resulting in low sales and lost opportunity. The manufacturer’s product training for the resellers’ salespeople emphasized technology specifications. This worked for the best and most experienced salespeople but left others overwhelmed and unprepared to approach customers. When the manufacturer refocused the training around how to sell the product (e.g., how to find and qualify buyers, describe the product’s competitive advantages, and show customers why they should buy), the resellers’ salespeople became more confident and sales increased.
- Are salespeople motivated to succeed? Salespeople are motivated when they perceive value from their efforts: career success, recognition, personal satisfaction, money, or all of the above. Remedies for sales force motivation issues include changing the incentive plan and/or modifying the criteria for recognition programs while acknowledging those who are successful. When a medical instruments manufacturer wanted to build market share by displacing a specific competitor, it offered salespeople a bonus for every competitive instrument displaced, and it set up a mobile app with a leaderboard of salespeople with the most displacements. First-line sales managers also helped boost motivation by encouraging salespeople and recognizing their successes.
- Do salespeople have enough bandwidth? When salespeople spend time inappropriately because they have too many diverse responsibilities, a new sales force structure can ensure focus on company priorities. When new customer development lagged at a technology company, it reorganized the sales force into a hunter/farmer structure. Hunters specialized in developing new accounts. Once a sale was made, a farmer took over to cultivate and grow the relationship and generate repeat business. Farmers provided existing customers with the ongoing support they needed, while new business development flourished because hunters were not distracted by time-consuming service activities.
- Do salespeople have the right innate characteristics? Training can develop salespeople’s competencies, but success can also require certain innate qualities. When sales effort misallocation occurs because salespeople lack characteristics such as intellectual flexibility or tenacity, the remedy is better hiring and retaining the right people. A construction supply distributor historically hired former construction workers for its sales force. Many of these salespeople had technical expertise but lacked the personality, capability, and drive to sell in challenging situations. When the economy slowed, selling became more difficult, and salespeople started focusing almost exclusively on friendly, loyal customers. The distributor changed its hiring strategy: instead of hiring industry experts, it began hiring “natural sellers” who were willing to learn the industry. The change, when reinforced by other changes to the sales culture, drove considerable revenue improvement.
These questions are sequenced so that those asked first can be addressed with easier-to-implement sales force changes. Changes to performance metrics and information (questions 1–2) typically require moderate effort and minimal disruption. Changes to sales force structure and hiring (questions 5–6) are disruptive and more difficult to implement and take longer to have an impact. Changes to sales training and incentives (questions 3–4) are in the middle. Some effort allocation issues are remedied with only easy changes, but many will require a portfolio of changes to create lasting improvement.