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How to Build a High Performance Sales Force

  Article published in DM Direct Newsletter
September 12, 2003 Issue
 
  By Eric P. Gist and Troy G. Miller

Around the turn of the last century, the Italian economist Vilfredo Pareto observed that, in most countries, about 80 percent of the wealth was controlled by about 20 percent of the people. What Pareto termed a "predictable imbalance" has since been applied to a broad range of management truisms based on a common principle: that most of an effect or outcome is produced by a disproportionately small amount of the effort that went into it. For example, 20 percent of the customers generate 80 percent of the sales. Eighty percent of the merchandise comes from 20 percent of the vendors. Or 20 percent of the employees do 80 percent of the work.

While this breakdown is hardly precise and never constant, the observation is still a useful rule of thumb. Today, many sales organizations operate in a much tougher environment than they are equipped to handle effectively. In many markets, buyers are buying less, if they are buying at all, and often demand more for their money. As a result, many companies have been forced to cut both sale force and operations budget. As the pie grows smaller, companies fight harder to protect their slice of it.

In a time of diminished opportunities, only the fit survive - true? Yes, probably. But this might be true at all times, whether boom or bust. Accenture recently surveyed 178 corporate executives about the performance of their sales organization. Given the general and prolonged downturn of the economy, we were not surprised to find that more than half (56 percent) of this group described their company's sales performance as just average, below average or "catastrophic."

However, other findings from this survey led us to conclude that the root for these disappointing results very likely lay within the sales organizations themselves, rather than with the overall economy. The majority of respondents - 73 percent - believed that because of the economy their customers either had less to spend or were harder to close. Nevertheless, only 38 percent believed their company was not generating enough leads while more than half (55 percent) reported they could not analyze leads effectively, and 47 percent reported that leads often fell through the cracks.

In other words, the inability to manage sales opportunities effectively was a greater problem than having too few sales opportunities. Further, the companies that reported the worst sales results identified problems areas not likely to correct themselves even in the most booming economy: salespeople who were too set in their ways to adapt, incomplete or inaccurate customer data, lack of performance metrics.

Although successful selling is undoubtedly far more difficult in a down economy, it can be done - but only with a sales strategy that is based on deep customer intelligence and implemented by a competent, confident sales force with the tools and processes it needs.

Alignment

In a weak economy, the first instinct is often to try reducing the cost of sales. However, cutting costs is rarely more than a partial solution. Companies will benefit most by focusing selling resources - people, programs, budgets and other operating assets - on the customers who produce the most profitable revenue today, and those most likely to do so in the future.

Who will buy? Why will they buy and how? Answering these questions requires solid customer data, and analysis that goes deeper than simply examining what happened last year. In a soft economy, the past doesn't matter as much as the future: customers need to be understood in terms of their current value, their potential value and their propensity to buy.

Alignment involves identifying the relationships that produce the most profitable revenue today and the relationships most likely to do so in the future, then reaching these customers through the most effective channels with messages and approaches appropriate to the customer's buying process and business problems. Alignment is not easy to achieve, however. Identifying the top 20 percent of your current customer base sounds simple and may even be simple.

But accurately predicting which customers will make up next year's 20 percent - the ones you want to focus on now - is far from easy. Real "sales insight" requires real numbers, business insight, knowing your most profitable customers/channel partners, revitalizing value propositions and allocating resources to your most profitable customers.

Consider, for example, Bouygues Telecom. For five consecutive years the company had seen dramatic growth in its share of the French mobile market. However, Bouygues knew it could no longer rely solely on new customer acquisition to grow. To increase the chance of converting a lead to a sale, the company had to be more targeted with its messages and campaigns, which wasn't possible with its current mass- marketing, mass-customer acquisition model.

The company began reorienting its sales efforts by defining the data it would need to analyze and predict customer behavior, identify consumer trends and pinpoint interest in particular products or services. Next, the company focused on customer segmentation. Bouygues had already established three basic segments, but these were not granular enough to provide in-depth customer insights. To complement these three segments, the company defined several hundred clusters - small customer groups with similar needs and behaviors.

As a result, the company can now make more accurate predictions of customer behavior, personalize its marketing campaigns and messages and calculate in advance the cost/response ratios for every marketing campaign it conducts.

After segmenting its customer base into clusters, Bouygues Telecom created a marketing plan and supporting processes that enabled the company to shift focus from a mass market model within a few large segments to a real-time model focused on the current needs of each customer cluster. More critical still, the Bouygues also developed a marketing automation system that helped it orchestrate and manage the complexity involved in targeting three customer segments, hundreds of customer clusters and multiple offers communicated through multiple interaction channels.

These new capabilities quickly translated into quantifiable business benefits. The number of customer contacts rose 450 percent, the accuracy of segmentation tripled and the time needed to create and execute campaigns dropped by 75 percent. Perhaps most important, the company's average revenue per customer went from last to first in the French telecom market.

Behavior

The right behavior can multiply the bottom-line benefits of correct alignment.  Historically, sales organizations have used two training techniques to improve how their salespeople behave: class room instruction and role playing. However, neither method is much help in reinforcing new habits once the class is over.  In part, this is because much training doesn't really address behavior at all. One study of industrial product companies, for example, showed the industry on average provides each salesperson on average 32 hours of training annually. But most of this training focuses on increasing product knowledge rather than improving selling and service skills.

Behavior change requires a step- by-step approach. First, identify the desired behaviors. Second, evaluate sales personal and identify gaps between current and desired behavior. Next, use training and support initiatives to help salespeople close the behavior gap. Finally, use performance measurement processes, metrics, compensation and rewards to reinforce desired behaviors. 

"Performance simulation," which provides a realistic work situation where a company's sales force can experiment, test competence and learn in a safe environment free from the fear of failure, is a particularly effective tool for helping the sales force acquire complex skills rapidly, reliably and consistently. Simply put, people learn best by doing. Salespeople, in particular, require the opportunity to practice new techniques in a risk-free environment.

British Telecom built a particularly ambitious training program, dubbed "BT eXperience," around performance simulation techniques. Through simulated customer interactions, account managers and account directors in British Telecom's business sales group refine their ability to understand customers' needs, propose appropriate solutions and successfully sell the company's new CRM offerings.

With 3,000 account professionals ready to sell a new proposition in less than three weeks, BT not only increased "learning productivity" by 400 percent, those who completed the program saw a significant and rapid uplift in sales revenue. According to company management, the program has boosted the workers' confidence in their ability to discuss and sell new services.

Based on these dramatic results, BT expanded this innovative program to other sales and customer service areas, implementing ten simulated training course modules over a three-year period. To date, the BT eXperience program has helped generate 80 percent more sales, increase customer satisfaction by 16 points, increase rental contracts by 220 percent, reduce order entry errors by 20 percent and reduce training time from 1.5 months to 5 days.

Capabilities

Both alignment and behavior require certain key "capabilities" to achieve - specifically, capabilities for reaching target customers through the most effective channels, with messages and offers tailored to the customer's buying process and business problems. This will be as difficult to accomplish as it sounds when sales teams lack the information and analytical tools required to identify, develop and manage their best bets.

  • Particular sales strategies require particular capabilities to succeed. Companies must map out the capabilities they have and the ones they need based on the strategies they have embraced. However, high- performance sales organizations have some capabilities in common. Generally, they perform better because they possess the customer insight capabilities required to understand their customers' needs, preferences and behaviors - and because they have injected these insights into their sales and marketing campaigns.
  • Moreover, these organizations also utilize sales applications and tools that automate non-productive sales activities, make information more visible and assessable, and help track and measure ongoing sales.

Conclusion

Compared to just a few years ago, the typical sales organization faces steeper challenges to bringing in new business. Overall, our survey respondents reported lackluster sales results that bear this out. While a soft economy makes a tempting scapegoat, the economic downturn is only part of the problem. Poor strategic alignment, ineffective selling behaviors and weak capabilities for evaluating and managing opportunities may be a far greater reason for disappointing sales that a shortage of selling opportunities.

Problems such as these will persist even after the economy improves; to improve sales performance, organizations must tackle these issues at the root.

  • Alignment: Segment your customers for both strategic and tactical (e.g., campaign-specific) analysis. Target under penetrated markets and higher-value clients and focus the sales force and operating resources on these opportunities.
  • Behavior: Train, compensate, coach, measure and reward the sales force in a way that reinforces the changes in behavior - e.g., consistently executing a new sales processes - that you want to produce.
  • Capabilities: Build or outsource essential capabilities for building and operationalizing "sales intelligence" - the insights the sales force needs to focus on the right opportunities and the decision makers, using the right messages and sales tactics.

This approach will not only help improve current performance - it will help organizations maximize sales performance when the economy improves and weather future downturns more effectively. Even in the toughest markets at the worst of times, a sales force can perform beyond expectations - thanks to a deceptively simple framework.

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For more information on related topics visit the following related portals...
Strategic Intelligence.

Eric P. Gist is a Los Angeles-based partner in the Accenture Customer Relationship Management service line. A specialist in customer interactions, Gist has more than 12 years of experience in building and deploying large-scale integrated customer solutions. His work includes optimizing sales force performance and sales operations and conducting sales force capability and value diagnostics. You can reach him at eric.p.gist@accenture.com.

Troy G. Miller, an associate partner in the Accenture Customer Relationship Management service line, is responsible for developing Accenture ?s sales transformation offerings and alliances. Miller specializes in improving sales performance for clients in several industries. With more than 13 years of consulting experience, he has worked with both Fortune 500 companies and Internet start-ups on various aspects of sales, including transformation, strategy, process and methodologies, and automation. You can contact him at troy.g.miller@accenture.com.

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