Sales Force Effectiveness: MAP IT OUT

Sales Force Effectiveness: MAP IT OUT

Sales teams are the front line of companies. They represent the face of the company to customers and serve as the champion of the product/service. They address issues, alleviate concerns, respond to sudden changes in the market, cross-sell and up-sell products/services and generate revenue, often while being located miles away from the headquarters. In a nutshell, the strength of a Sales force directly impacts ultimate success of a company.

As entrepreneurs pursue robust and profitable growth, one question we often get asked, as value creation partners, is “How can I make my Sales team more effective?”

We’ve distilled our recommendations, based on our experience with a broad range of companies across industries and geographies, into eight key insights, which for ease of reference follow the acronym “MAP IT OUT.”

• Metrics and Targets: At the very outset, the management needs to clearly define the metric(s) and the target(s) that the Sales team is being measured against. For example, should the metrics be based on sales volume or sales revenue? Is market share a better metric since that also accounts for market forces that are not under the Sales executives control? Should metrics be more forward looking and include expansion in coverage (e.g., sales establishments covered) rather than focusing solely on maximizing revenue from existing outlets? The metrics identified must be aligned with the long-term objectives of the organization. Sales teams need to have stretch, but achievable, targets based on these metrics. There is nothing more demotivating than targets imposed by management, which the Sales team considers completely out of reach, and perhaps even disconnected from the reality of the industry.
• Activity tracking: Higher (and more effective) activity invariably leads to better sales performance. Sales executives who spend more time in the field receive more input about existing and prospective customers, and gain valuable competitive knowledge as compared to those who spend more time in comforts of the office. Define a minimum threshold level of activity (e.g., number of referrals for prospective customers, conducting cold and warm calls to convert new customers, having face to face follow up meetings) and ensure that all Sales executives meet this threshold.  Simple tools like self-reported SMSes can help track activity. If a Sales executive has the desired level of activity, but is still not meeting targets, it helps management quickly focus on the necessary remedial action.
• Planning and Knowledge management: Activity without planning is wasted effort. It is important to plan routes and visits to customers that the Sales team needs to hit daily, weekly and monthly. But planning in sales also needs to be dynamic.  The best Sales leadership teams have the ability to reshape their plans based on strong knowledge sharing practices.  Via daily interactions with current and potential customers, Sales executives have a wealth of knowledge, which should be systematically captured and processed. It is important to share this knowledge not only across the Sales teams but also with other functions such as Marketing, Product management, Design and R&D as it could have a significant impact on the company’s strategy.
• Incentive Scheme: The incentive scheme is by far the most powerful tool an entrepreneur has to improve Salesforce productivity. The incentive scheme should be flexible enough to reward excellent performance yet simple enough to be well understood across the sales organization. A basic rule of thumb to check for simplicity is that a Sales executive is able to quickly calculate his/her variable pay every morning. If not, the architecture may be too complex. Timeliness of incentives is also very important to motivate strong performers to maintain their momentum. For monthly incentives, the MIS needs to support payouts no later than two weeks into the following month. Other best practices, across different industries, include exceptional bonuses for the top performing Sales executive to motivate high performers to perform better, team oriented goals so that Sales teams are incentivized to work together and coach underperforming members, quarterly holdouts to prevent any end of month channel stuffing, and disproportionate rewards on acquiring new customers. The metrics that go into the incentive scheme and the payout ladder for outperformance and underperformance must be carefully crafted to drive desired behaviors within the organization.
• Territory mapping and Network Design: As a company grows, so does the diversity of its customer base. As a result, the customer profile across the geography rapidly changes. On a periodic basis, one needs to review if the best Sales people are mapped to the most valuable territories, and if any regions are under-invested, thereby opening the door for competitors. Territory mapping will also help ensure that there are no overlaps between regions that may cause unnecessary friction within the Sales team.
• Organization buildout: For growing companies, adding well-trained Sales executives at the right time can help supercharge growth. One needs to clearly understand what the contribution margin of the company’s product/service is and the average productivity of a new Sales executive. One can then find out the breakeven volumes for every additional Sales person added to the force. Based on the network design exercise done as part of territory mapping, high potential and/or underinvested areas for the company can be identified. Bolster the Sales teams in those areas to maximize returns.
• USP Value based selling: Value based selling plays a key role in differentiating the company’s product/service in the marketplace. One trap that many Sales teams fall into is simply selling based on price. Instead, as the entrepreneur, define and articulate the core value of your product/service and encourage the Sales team to sell based on that value proposition. High performing Sales teams often hit the market with an interesting factoid about the product/service every month. It keeps the customers interested and helps sell the product/service further.
• Train Sales Management: The best Sales executives do not always make the best Sales managers. Many organizations invest in training the Sales executives, but not the new Sales managers. The skill set required to be a manager is different from the skill set that makes for a successful Sales executive. As a result, many successful sales executives stumble once promoted to a managerial role. New Sales managers need to be trained on how to coach underperformers and how to extract even more from top performers. Sales teams with strong lower and middle management ensure sustainability of growth. And remember, that some times, it is better to incentivize a high performing Sales executive to remain and grow within their current role, rather than moving them over to a managerial role.

In summary, while selling is an art, we believe that Sales Force Effectiveness is a science. Some of the above best practices are quicker to implement than others. However, for a well-oiled Sales machine, a company will need to eventually get to all of them. You can do it too. Just MAP IT OUT.