January 2005

 

Case Study Update:

Increasing Sales by Improving Sales Effectiveness

 

Case Study

1) Update:  Call to Action

2) Sustaining Progress

3) New Challenges

4) Conclusion

This is the second of a three part series describing one company's efforts to improve sales productivity.   In May we highlighted the efforts of a European client to improve frequency on its target customers (click here to read the article).   This client was able to achieve outstanding improvements in target customer frequency, and an estimated $15MM sales increase attributable to those efforts, within six months of beginning its SFE initiative. This article provides an update of the client's efforts to increase sales by improving customer frequency.

As brief background, this company only started to collect call activity data from its sales force in early 2003 and shortly thereafter asked RMCI to help develop a process to effectively track and improve call performance.   Together, RMCI and the client developed a frequency metric, and RMCI provided a quick diagnosis of several key issues:

•  Overall frequency attainment on key customers was highly variable, and generally low

•  Across the major markets, only 20-50% of customers were seen with the desired frequency

•  Up to 30% of effort in some countries was on non-target customers

•  As many as 30% of target customers were not visited at all in the most recent six month period

•  Planned target calls the sales call goals established for sales representatives -- greatly exceeded the total call capacity of the sales force

Call to Action

With these insights, management focused on improving the situation in the 2 nd half of 2003.   As our May article highlighted , the results were dramatic.   Overall, the percent of customers seen with the desired frequency increased by 20%, and in some markets by almost 100%.   More importantly, there was a clear correlation between the frequency gains and sales increases in the five major European markets -- we estimate that $15MM in increased sales resulted from improved frequency performance.

Results

The key takeaway:   frequency improvement can be significantly improved in a very short time period, and these improvements increase sales.

What Next?

So what happened in the subsequent six months?   Did frequency achievement on key customers continue to increase rapidly?   We looked back, and the results are very interesting.

Some countries continued to show nice improvement.   For example, in Italy the percent of customers seen with desired frequency for one team increased from 46% to 87%.   However, somewhat surprisingly, frequency was generally flat across all European sales forces, and in some cases, frequency performance actually dropped.   In the UK , for instance, the percent of customers seen with the desired frequency by one team fell from 50% to 36%.

Concerned by these findings, management dug into the root causes for this slippage.   And the insights here highlight some of the key challenges sales management faces when it focuses consistently on improving sales effectiveness.  

Quick wins and hard work

After dramatic initial improvement, why did overall frequency performance plateau in the second six months of the frequency initiative?   Part of the answer can be found in the ongoing effort to identify the right customers to call on.   In the first six months of the frequency initiative, the client focused its energy primarily on motivating reps to do a better job of calling on their target lists.   But management was also convinced by RMCI's early diagnostic analysis that target lists in some countries would need to be significantly improved to ensure that reps called on the highest quality customers, not just those that offered greatest access.  

Several countries implemented major re-targeting efforts in the second six-month period. In mid-cycle, reps began to develop relationships with the new, high priority customers on their target lists and phased out high frequency coverage of customers whose target status was lowered.   Because these changes occurred mid-cycle, frequency performance temporarily declined in the countries with major retargeting efforts even though the sales forces were implementing changes that will ultimately increase sales.

Our client's European management continues to use the frequency analysis as a key strategic discussion point with country management across   European markets.   The analysis has helped align sales and marketing on key sales objectives.   Client management believes that the European sales forces continue to make significant progress.   The targeting changes are one-time events, and management expects continued improvements in the frequency metric.   Combined with improvements in the quality of the customer target lists, sales should continue to improve.  

Conclusion

Achieving and sustaining sales productivity improvement is not easy.   It requires excellent change management, continued focus, and persistent effort from all levels of the sales organization.   The first two parts of this article demonstrate that a focus on key drivers such as customer call frequency can improve sales activity and the top line. This article also shows that sustained progress is difficult to maintain.   Often, complementary initiatives can seem to work at cross purposes in this case the needed re-targeting initiative contributed to reduced frequency performance in many markets.   But getting the sales process right is critical to improving sales even when measurable activity such as the frequency metric suffers.   Our third article in this series will provide a final update on our client's effort to improve sales through their sales productivity initiative.

 

Questions

If you have questions or would like to discuss the contents of this article, please send us an e-mail and a senior consultant will respond to you.

 

Other Newsletter Articles This Quarter

 

Best in Class Performance:  Improving Sales Effectiveness Through Superior Change Management

To improve sales effectiveness, sales management must diagnose key barriers to progress, develop the right plan to overcome those barriers, and determine the best ways to leverage their sales forces' strengths. But without excellent implementation of
change management techniques, most improvement efforts will fail. 

This article highlights how one firm implemented a proven change management framework to drive more productive sales rep activity.

 

Building Internal Sales Planning Capabilities:  New Desktop Sales Force Sizing Tool

Many life sciences companies have dedicated themselves to building internal sales force planning and sizing capabilities in country affiliates outside the United States.  Until now, many have found it difficult to build these internal capabilities because software tools have not been developed to serve these specific needs.

That's why RMCI developed the Advisor XL to support our customers in building internal sales sizing expertise with a range of training and support options to meet the
needs of any country organization from Vietnam to France to Brazil.

 

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