Enhancing revenue through sales force effectiveness
Third Horizon Consulting Partners looks at a structured basis for improving sales force effectiveness.
CFOs often play a key role in margin improvement activities within the business, particularly through restructuring and cost improvement.
Increasingly, this role is expanding to seek opportunities for improving the revenue line. Extending the reach of finance into the sales force is often met with resistance requiring structured thinking to manage risk, clarify the opportunities and ensure these are being rigorously sought.
An approach that regularly reviews the customer base and sales activity can yield sustainable benefits with typical revenue improvements including
win-back of orphan customers who are not allocated to sales people or dormant customers who have lapsed as buyers
sales growth campaigns focusing the right sales skills (usually hunters) on high potential value customers and retaining high value customers by ensuring good account management disciplines are implemented
margin growth achieved by reducing the cost to serve either through improved effort and productivity of call plans, or through lower cost channels or contact methods
reduced time to market for new products through better sales effort coordination
While sales departments and sales force effectiveness has traditionally been the realm of sales directors and in some instances marketing directors, a strong partnership is emerging with the finance team who are now expected to provide the necessary horsepower to analyse, diagnose and assist in planning how to improve sales effectiveness.
Quite often the change management risks to revenue is cited as a reason not to touch the sales force and in some instances, as a defensive mechanism to avoid change. The answer is a structured approach that starts with helping the sales team to understand who the companys customers are, the economics of how these customers are served and what the potential is to improve the value of those customers.
Below are typical examples of the analysis conducted by Third Horizon to provide a structured basis for improving sales force effectiveness. This quantitative analysis must be reviewed with an understanding of some key underlying drivers for improvement.
Understand which customers you want to grow, retain or exit view your revenue line as a portfolio.
Know what skills and competencies the sales team have many sales forces with low turnover or limited change over many years tend have a sales force aligned to account administration and general relationship activities (farmers). Sales objectives and workforce skills need to be aligned.
Analyse the economics of the channels used to service customers. In many cases, there will be cheaper methods of contacting customers than a face-to-face meeting, while still meeting their needs.
Ensure you understand how much support each customer type and channel requires these are typically hidden costs that on a 'user-pays approach' may alter the actual profit a customer generates. This will also influence how much customer time your sales people have and where they spend it.
Know how your customers want to be serviced (coverage) understand the frequency and extent to which sales calls are made versus what is actually required to grow or retain a customer.
Realign sales management according to reasonable spans of control usually 8 to 10 staff as a maximum.
Set appropriate targets, measures and incentives always a critical aspect, but one where there is diversity of views as to the balance between margin and revenue growth.
The case study below provide sample customer and sales analysis that have been developed for Third Horizon clients as an end-to-end illustration of the steps to re-align the sales force to market opportunities. The specific objectives were to align sales effort to growth opportunities, rebalancing effort away from low value/low opportunity accounts and ensuring that cost to serve each account was appropriate.
Third Horizon Consulting Partners was established to focus on assisting clients design and implement strategy. Their customers include a range of major organisations in industries including: financial services, industrial and consumer products, media, transport, water and power utilities, and government business enterprises.
