|
|
|||||||||||
| January 2005 |
|||||||||||
|
|
|
Making the Transition from Sales Effectiveness Project to Process This article was originally published in the Sep. 21, 2004 Eyeforpharma Briefing
Successful sales organizations must excel in both sales strategy – choosing the most effective and efficient sales force deployment, including sizing, for the product portfolio – and sales effectiveness – creating the right processes and coaching climate to draw maximum productivity from the sales force. Today's pharmaceutical companies are focusing less on growing the sales force and, instead, are trying to improve sales force productivity and make better resource allocation decisions across markets in a cost efficient manner. Building internal capability on both fronts has taken center stage at many companies. For managers who need to do more with less, this article offers practical suggestions for improving sales productivity. A subsequent article will describe how successful companies are building internal strategic capability with a new generation of market modeling software tools. Sales force effectiveness must be a sustained priority For many companies, sales effectiveness tends to be only an occasional priority. In good times, sales force growth drives the top line. As times turn tough, sales managers must suddenly learn to do more with less – that is, increase productivity. The sales force represents the second largest investment (after R & D) for the typical pharmaceutical company. So, why should the productivity of that asset be only a sporadic priority? In many companies, growth in sales forces during the past 15 years masked the gradual erosion of basic selling skills and processes. Today, the temporary downturn in industry fortunes reveals that few companies display consistent competence in the key sales drivers – targeting, frequency, message, and coaching. Most companies now have the opportunity to rediscover the value of sales effectiveness and to institutionalize sales processes that will drive maximum top line performance in good times and bad. In fact, sales managers already sense that sales productivity is not what it should be. In a recent RMCI study, more than 90% of senior managers reported that less than half of their companies' sales calls were effective. Yet many remain uncertain as how best to implement effective solutions. Key elements of sales effectiveness improvement Successful sales effectiveness initiatives include four critical elements: • High level sponsorship and governance, • Cross-functional cooperation, • Appropriate performance measurement, and • A focus on the first-line sales manager. Sales productivity is not just a sales issue Building internal sales excellence begins by recognizing that sales productivity is not just a sales issue. Marketing, IT, HR, sales training, and sales operations all may contribute to or inhibit the effectiveness of the sales force. The sales organization can make incremental progress on improving productivity in its own silo, but significant and sustainable effectiveness requires independent functions working together continuously to support the sales force. In order to drive consistent cross-functional focus on sales effectiveness, best in class companies call on experienced managers to head their SFE initiatives and give them the authority and independence to bridge the relevant functions. These managers typically report to senior level management, independent of the sales and marketing functions. A related element of sales effectiveness success is durability. A flavor-of-the-month approach may generate quick wins and incremental gains, but will lead to long-term failure and frustration. Creating competitive advantage in sales effectiveness requires companies to bring the intensity of a product launch to the process of building sales effectiveness. They must institutionalize a process of diagnosing sales effectiveness, creating and implementing cross-functional solutions to improvement opportunities, tracking and monitoring progress and adjusting implementation based on demonstrable results. In a recent example of a durable, cross-functional SFE initiative, the commercial organization of a market leading firm in Latin America began the transition from SFE project to SFE process when a senior regional sales manager was appointed to oversee the sales improvement process. Getting the metrics right is half of the battle Gettting the right team in place is a critical first step to improving productivity. Developing the right “fixes” and consistently measuring compliance generates top-line growth. Many sales effectiveness teams accurately diagnose sales effectiveness problems, but they often miss the solution. One of the most commonly used sales activity metrics is sales calls per day. Managers reason that if the sales force isn't working hard, it won't produce sales. Unfortunately, calls don't drive sales. Calls on the right customers, with the right frequency and message, drive sales. The “right” customers, however, are often difficult to access. By measuring calls per day, companies encourage reps to visit customers based on their availability, not on their value. The result is that reps expend lots of effort calling on easy-to-see and less valuable customers, and generate mediocre sales. A better metric to employ is the percent of customers seen with the desired frequency. Figures 1 and 2 show results for a typical sales force that is exceeding its 8 calls per day goal but failing to achieve its frequency objective of 12 calls for each of 2,250 target customers. In this simplified example, to meet the calls per day goal, the sales force has expanded reach to 2,800 customers. As a result, it is averaging only 10.1 calls per customer, and only 400 customers received at least 12 calls during the period. Figure 1
Figure 2 Poor frequency attainment is a common problem in all markets and illustrates the need for high-level sponsorship, cross-functional cooperation, and accurately identifying the root cause of diagnosed problems. This common problem has many potential causes:
Potential solutions might include: • Refining the target list or frequency goals to effectively balance plan and capacity, • Developing more appropriate marketing tools, • Refining and communicating the targeting strategy to improve buy-in, and • Better matching the targeting strategy to the talent level of the sales force. In each case, the potential solution to the problem will require sales and marketing to work closely together to refine and communicate the targeting strategy and to monitor and report progress in improving frequency attainment. It is common for companies to focus the sales effectiveness effort on the sales representative. After all, it is the representatives who generate sales. But our experience suggests that the most critical position in any sales effectiveness initiative is the first-line or district sales manager (DSM). For this reason, it is critical to include the regular participation of several DSMs in any sales effectiveness team. The DSM is the only individual in the company who regularly interacts with the sales rep. It is the DSM's responsibility to align sales execution with corporate, sales, and marketing strategies. The rep may receive training in key sales skills from the sales training department, but the DSM is responsible for reinforcing, managing, and coaching those skills in the field. Without the active support of the DSM's, the best strategic and tactical plans will not be effectively implemented across the sales force. Figure 3 provides an example from a recent U.S. sales effectiveness initiative. The sales organization surveyed senior managers, district managers and sales reps regarding key sales activities. Senior sales management rated frequency performance as a high priority and critical determinant of success. Yet a survey of DSMs showed that few considered frequency a high priority, and as a result, few reps considered it a high priority either. In this case, the DSMs were failing to effectively align sales execution with the sales and marketing strategy. Figure 3
The DSM position should be a key focus of sales effectiveness initiatives. Superior sales execution requires excellent and regular coaching. Many companies are re-discovering that the DSM's primary responsibility ought to be coaching reps to effectively manage their territories. Studies demonstrate that the most successful managers spend more time traveling with and coaching their representatives. Unfortunately, in many companies, managers spend most of their time in the field being “super-reps”, and out of field handling administrative or other non-coaching duties. If sales effectiveness depends on superior coaching, what can firms do to improve it? Providing appropriate training in coaching skills is critical. No company would think of sending a sales representative into the field without training them in key aspects of their jobs. Yet because many companies think of DSMs as super-reps rather than coaches, they don't make the investment in training DSMs in the key skills and behaviors that are critical to coaching success. As a result, many DSMs are poorly prepared to succeed in their new position. Once DSMs are effectively profiled, recruited, and trained, it is important to ensure that they are putting that training to use. Best in class companies expect DSMs to spend 70% - 80% of their time traveling with reps in the field. They track and evaluate DSMs on compliance with the field travel goal. Improving sales effectiveness requires sustained and focused effort. It is a process that must be institutionalized at a high level in the organization to foster cross-functional cooperation and maintain a continuous focus on the link between effective sales activities and sales results. In short, it is neither simple nor painless. Yet companies that appropriately focus effort on key sales activities have reaped significant rewards. The European commercial operation of a U.S.-based company recently initiated an effort to improve frequency attainment in Europe . In just six months, it realized sales increases of $16 million attributable to frequency improvements in just five countries. Improving sales effectiveness pays for itself many times over in improved sales.
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 Case Study Update: Increasing Sales by Improving Sales Effectiveness We believe
that improving long-term sales force effectiveness (SFE) is both critical
to sales success and very difficult to achieve and sustain. Our May
newsletter highlighted the efforts of a European client that generated
$15 MM in sales attributable to In this article, we provide an update on the client's progress after a full year of implementation and some of the difficulties it has encountered in sustaining sales gains. 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
Prior Newsletters To view prior newsletters, please visit our News & Events web page. Subscribe/Unsubscribe Please click here to unsubscribe from the RMCI newsletter. Copyright Notice Copyright 2004, RM Consulting International. All rights reserved. Every viewer may copy, reprint or forward all or part of this newsletter to friends, colleagues or customers, so long as any use is not for resale or profit and the following copyright notice is included intact: "Copyright 2004, RMCI. All rights reserved." Contact Information RM Consulting International
|
|
|
|||||||
