How to improve sales effectiveness

For the decision makers of the enterprise, there are not many factors that can drive the increase of business income and profit growth of the enterprise, especially in today's fiercely competitive and fast-growing environment. in this way. These elements have become strategic points in the daily thinking of decision makers, including "effective cost control", "providing leading products", "better marketing tools" and so on. However, cost control does not directly help to ensure rapid and stable growth of revenue; the development of technologically advanced products will be a long cycle and may be full of risks; and a good plan cannot be a driving force for the continuous growth of an enterprise force.

Comparatively speaking, among these elements, the easiest to implement and the easiest to see results is "Sales Effectiveness".

Promoting sales effectiveness can be understood as "by accurately defining the focus of sales and target customers, providing targeted high-quality products or services, and helping the sales force improve its sales efficiency by various means". Doing so, without increasing cost budgets and staffing, can rapidly improve sales in just a few months, so "sales effectiveness" is becoming a topic of increasing concern.

In practice, however, the issue of Sales Productivity is often overlooked or misinterpreted. For example, when managers see stagnant or declining sales, they often try to solve the problem by devising a new set of target commissions. After the implementation of the new commission scheme, the sales staff worked more diligently, but there was only a temporary increase in sales performance, or there was no sign of improvement at all. At this point, people tend to blame external factors rather than further examine potential problems with sales efficiency.

Mercer's sales effectiveness model is mainly developed around the following three core questions about successful sales:

1. What is the focus of sales?

2. How to sell?

3. How to conduct effective sales incentives?

Specifically, it can be shown by the following model:

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1. Re-develop the sales strategy according to the business strategy

The simplest understanding of the sales strategy is How to provide the right services and products to the right customers? Specifically, it can be expressed through the following three questions:

1. How do you define your customers?

·Do you know who your company's most valuable customers are? Does your sales force know how to find and identify valuable customers?

2. How to design a sales channel?

·What kind of sales channel is the most effective for different customer groups? Is your sales force effective in integrating and applying different sales channels?

3. Propose an effective key value proposition (Value Proposition)

·For different customer groups and different competitive situations, will you propose targeted product positioning or pricing strategies?

Mercer recently redesigned its sales strategy for a North American medical device company facing declining sales. One of the key findings of Mercer's research is that the company has more than 40 percent of its sales force serving customers who only contribute about 20 percent of its profits. Once the problem was recognized, the company reorganized its sales organization and business processes with the help of Mercer (see Figure 2). After such a change, the company increased sales by 6% while reducing costs.

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In most cases, a large amount of historical data is needed to calculate the input and output ratios of different customer types, which is very important for the enterprise's information management system. High demands are placed, which often means that businesses need to run ERP or CRM systems stably for quite some time. But in some cases, this is not entirely the case.

For those small and medium-sized enterprises, because their products and services are relatively single, sometimes it does not require very complicated computational analysis to find the correct answer. Sometimes even just some simple data and a deep understanding of the business itself can make the right judgment. But in fact, although these small and medium-sized enterprises can theoretically accept the idea that "different target customers should be classified to provide differentiated services", once they reach their own companies, they often ignore this problem.

For example, in the dealer network of a famous domestic car brand, Mercer found during the investigation that all managers admitted that about 80% of the profit contribution from the maintenance services it provided came from about 20% of its loyal customers . But it is surprising that among all the hundreds of franchised dealers all over the country, only a few of them are equipped with a dedicated service team for these 20% loyal customers, providing targeted and differentiated services. . The vast majority of the remaining dealers are still the traditional undifferentiated, or very little difference service. But it is also the overall operating performance and profit margins of these dealers that are significantly ahead in the entire network. Their first step in providing differentiated services has driven them to take a big step forward in business operations.

2. Design efficient sales organization and sales process

A small company that sells large-scale complete sets of equipment as an agent, with an annual sales of about 300 million yuan. The foreign brands it represents have a good reputation in China, and the product quality and after-sales service are ahead of other brands. Therefore, the company has not had a difficult time in the past few years. Its sales director leads a sales team of about 20 people, which can exceed the task every year.

Recently, however, other first-class foreign brands have begun to adjust and pay attention to the Chinese market and increase their marketing efforts, which has brought some new problems for the company: the company's sales growth has stagnated or even declined in the past year. Market share declined with no sign of recovery at all; key employees began to lose ground to new entrants. This was completely unheard of in the past. How should these problems be solved?

Mercer entered the company to investigate and first discovered that its employee attrition was more severe than its leadership realized. The leadership has only begun to recognize the loss of employees in the last year, but after analysis, although the absolute value of the turnover rate in the past 3 years is not high compared with the market, the main component of its turnover is the age of 2. Key employees with more than 10 years of experience and outstanding performance!

Mercer further investigated and analyzed its sales roles, and found that a large part of its sales department's functions are sales support responsibilities such as sales plan formulation, ERP and CRM system management and maintenance, order management, and warehouse management. . And their managers tend to have the top-performing sales reps part-time in these roles. Management considers this type of responsibilities to be management responsibilities, and having the best employees to do them is an incentive and recognition for them!

The problem becomes obvious once identified. The problem with doing this is obvious: the best reps spend their precious time not with customers but in front of computer screens because they spend time dealing with a lot of sales enablement. And this further reduces their effective sales time, which in turn directly affects their sales commission income! If these great reps don't see room for career growth (they'd rather handle clients than work with computers), or see room for revenue growth (actually, their revenue drops significantly due to the reduction in sales hours), They can only choose to leave.

The solution suggested by Mercer was actually quite simple, they needed to restructure their sales organization. One of the most important moves was the creation of a dedicated sales enablement team that freed up its sales force to focus on sales full time.

The above case can clearly illustrate that one of the core issues in the design of sales organization and sales process is whether the sales force is organized correctly, reasonably and efficiently.

But in most cases, sales directors often do not have an accurate and rational understanding of the effective time allocation of their sales force. Figure 3 below shows how a company's salespeople allocate their time. Statistics show that only about 30% of the time is really effective sales time, which is used to find customers, receive customers, and conduct face-to-face sales, while the remaining 70% of the time is spent on non-effective sales time. Such as travel, administrative affairs, client affairs, planning, etc. This statistical result greatly exceeded the expectations of the company's management.

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Improving the above situation does not always require a lot of resources and costs. The reasons for the above problems are often because there is no clear definition and division of responsibilities for sales personnel, and the sales process is not optimized. By redefining the sales organization and job responsibilities, optimizing processes, and reducing low-value work, salespeople can spend more time on effective sales. Figure 4 below shows that by re-optimizing a company's sales organization and processes, Mercer reduced the ineffective sales time of its salespeople from 49% to 20%.

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Other typical, complex, and difficult-to-find solutions in this area include:

· Divide the sales organization by product, geography, or customer type?

·How are customer priorities prioritized?

·How are changes in key value commitments reflected in the sales process?

·Are the roles of sales and service clear?

·Do the roles need to be varied by client?

·Does the current organizational structure have clear roles and responsibilities?

·Should different regions have different degrees of autonomy?

·Do you know the resources required to complete sales to each customer segment?

·What is the best sales territory division plan?

Each of the above questions can be a starting point when we think about re-structuring our sales organization. Even if we find reasonable answers to each question, we cannot look at each question in isolation, but also need to integrate them together to form a reasonable solution.

Three, provide sales staff with suitable incentive programs

It is not enough to have a good strategy and effective organizational process, enterprises also need to have an efficient sales team to achieve sales goals. A prerequisite for having a high-performing team is the ability to provide the right incentives.

A complete incentive package goes beyond just compensation. In Mercer's sales effectiveness model, it contains 8 elements, which can be shown by the following model, see Figure 5.

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In today's increasingly fierce market competition, if each competitor is already difficult to show obvious differences in the products and services that can be provided, then the balance that leads to the advantage The straw that tilts to one side is likely to be the winning side with higher-quality talents. In fact, it is the dream of every business manager to have a sales team that is better and more efficient than others.

It just so happened that not long ago, Mercer just completed the system work for the sales channel system of a famous domestic auto manufacturer.

Typically, a car is not sold as a technical product, but first as a consumer product. Especially before 2003, the domestic auto industry was booming, and auto sales were generally sold at a price increase. Therefore, in the minds of dealers, auto sales staff did not need high requirements. However, with the increasingly fierce market competition and the increasingly rational purchasing behavior of consumers, manufacturers and distributors are increasingly aware of the value of salespeople, because they realize that only first-class salespeople can accurately and effectively transfer the value of brands, advanced technology , first-class quality services, and the value-added services that manufacturers can provide to consumers. Moreover, as the requirements for salespeople are getting higher and higher, the investment in their training is also increasing. The time for an excellent car salesperson to grow to maturity has grown to more than 2 years. At this time, both manufacturers and distributors suddenly realized some problems that had been ignored before, that is:

1. The problem of personnel selection: what kind of sales personnel do we need?

Are the current salespeople qualified? Whether it can meet the requirements of enterprise development? And then ask yourself: what kind of sales people do we need? What qualities and characteristics should they possess? What advantages should they have over their competitors' salespeople?

2. Training: How should we improve their ability to improve their efficiency more effectively?

Manufacturers and distributors attach great importance to the training of sales personnel, including product technology, sales skills, standard sales procedures, etc. But the huge investment in training doesn't seem to pay off. The problem is that there is a lack of a systematic training system for sales personnel, well-planned training courses and a tracking system are established to improve the efficiency of training.

Mercer's solution is to start with the establishment of a salesperson's competency model, and define its competency model through behavioral event interviews of excellent employees, difference analysis of high-performance and low-performance employees, and competency questionnaires. The competency model establishes the salesperson's career plan, defines in detail the competency requirements for each level of the career, and the training courses that need to be attended. Such a career plan has become the personal development path of each salesperson, and training has changed from a management requirement to a spontaneous behavior, which drives salespersons to improve their personal qualities and thus their sales performance.

The solution of the competency model can also be very effectively applied to personnel selection. Mercer has designed a complete and rigorous personnel selection system and tools for it, including designing a one-day personnel evaluation and selection meeting formed by a series of simulated activity scenarios, allowing candidates to complete pre-planned simulation tasks. Professionally trained professionals conduct observations, which in turn conduct a comprehensive assessment of the applicant's abilities, from which qualified individuals are selected.

3. How should they be motivated? And link incentive and assessment science?

In the era of increased car sales, there used to be young people who had just graduated from school and could easily earn a monthly income of thousands or even over 10,000. They didn't put in particularly hard work back then, and the payoff seemed easy. Many young people buy a house or a car with a mortgage due to inexperience or impulsiveness. But soon, in 2004, car sales seemed to have entered the winter overnight, and it became very difficult to sell a car, even ten times as hard as before. The income has shrunk to less than half or even one third of what it used to be. At this time, a question that employees, including managers, are very confused about is, why their efforts have increased exponentially, but their income has dropped? Some people will further consider whether it is fair and reasonable for employees to bear the loss of income due to market changes?

Before answering this question, we first need to understand a basic principle of incentive scheme design. A salesperson who sells life insurance by telephone, most or even all of his income comes from the commission of his sales income; while a fund salesperson whose sales amount to a large institution may be tens of millions of yuan, the main component of his income is It is a bonus based on the target achievement rate. The reason for this difference in the choice of incentive schemes is that, for the insurance salesman above, if he cannot attract the interest of customers within 30 seconds and make customers willing to buy within 3 minutes, the salesperson will Basically lost the customer. And this can almost be considered to be entirely determined by their personal sales ability and sales skills; however, for fund salesmen, the situation is very different. If you want to successfully complete a huge fund sale, first of all, the sale process cannot be completed in just a few minutes. Secondly, the reasons that drive buyers to purchase behavior, the salesperson's personal selling skills may be relegated to a secondary factor. The real reason will be the brand and strength of the fund company, the degree of matching between fund varieties and buyers, the past performance of the fund, and the trust in the fund manager.

The above comparison actually shows a truth. What determines the incentive strength of a salesperson is the degree of influence of the salesperson on the final sales behavior. The greater the degree of this influence, the greater the strength of its excitation. If this personal contribution dominates all influencing factors, it can usually be motivated by a commission, such as the aforementioned insurance salesperson. If personal contribution is only a secondary factor among all sales influence factors, or one of many factors, the bonus method should be adopted. The principle can be seen in the figure below:

Back to the case of the car dealership, we first need to analyze the driving factors that affect the performance of car sales. The results show that car brand, product technology, service quality, cost performance, market environment, and competitors' marketing strategies all have a huge impact on the final result of car sales. One of the most direct examples is that today's car consumers have become quite rational, they often do not simply trust the introduction and promotion of sales staff, but more trust their own judgments. They often have a clear concept of the car in their mind, and they know exactly what kind of car they want to buy.

Therefore, there will be three significant changes in the incentive scheme for automobile salesmen compared with the previous ones:

First, the incentive part will be changed from a single commission to a mixed method of bonus plus commission. The reason is as mentioned above, because the salesperson does not play a decisive role in car sales, so the proportion of his bonus is appropriately increased and the proportion of commission is reduced.

Secondly, the concept of management by objectives is introduced. For example, in the original incentive model, when the market is good, a salesperson can sell 20 cars per month, and if each car gets a commission of 300 yuan, he can earn 6,000 yuan; but when the market is bad, the worst Even if you can only sell 2-3 cars a month, your income may drop to 600 yuan. In fact, enterprise managers should reasonably adjust the sales targets of sales staff according to market changes, and then manage according to the targets. By setting goals flexibly and reasonably, managers can not only accurately convey the company's business goals to the sales staff, but also keep the sales pressure of employees consistent with the business goals of the enterprise, thereby mobilizing the sales enthusiasm of employees to the greatest extent.

Finally, set scientifically sound key performance indicators to accurately measure the performance of salespeople. For salespeople, not the number of units sold is the only measure. Customer satisfaction, vehicle delivery satisfaction, sales profit contribution, sales turnover rate, team sales performance, etc., will jointly constitute the evaluation index system for sales personnel.

This article is a contribution from the author. The author works for Mercer Consulting, a well-known management consulting firm.