Rightsizing the Salesforce
When recession bites, it is important to know how much each operation costs and your own internal efficiencies. Most world class companies have a good handle on most areas of their operations; they know how much it costs to produce and deliver their products and services. Yet firm information on two vital operational areas remains difficult to obtain: Sales and Marketing.
The current climate has increased demands for ROI information, the use of CRM and pipeline management systems have started to shine a light on these black arts. However in industrial markets, senior management rarely have enough information to make accurate ROI predictions. Marketing budgets and sales targets tend to be agreed using a mixture of historical knowledge, instinct and negotiation.
These problems can be amplified when planning the size of the sales force. Good salespeople are expensive: they have decent salaries, commissions, bonuses, cars and expense accounts. All companies need to ensure that such expensive resources are being fully utilised. Yet too much time can be taken up chasing inappropriate opportunities, cold calling and activities other than closing business.
Measuring sales efficiency is problematical. Does hitting a sales target necessarily mean that a good job has been done? How much more business could have been secured? Or did the sales person just get lucky? Certainly the harder they work, the luckier salespeople become. But working long hours to compensate for a lack of efficiency is unsustainable.
Often organisations use sales professionals to generate opportunities; expectations of revenue per salesperson are made. But this is an inefficient way to determine the size of the market. It is also costly. In an ideal world the salesforce should match the number of leads generated from a marketplace.
Where lead generation is poor, salespeople will naturally migrate towards servicing existing clients. Business generated from long term clients is important; it can represent up to 80% of revenue. However, much of the revenue would be secured without further sales involvement; tuning the organisation so that account management and new sales are correctly balanced is critical if an organisation is to operate efficient sales processes.
In many organisations:
1. Lead generation is haphazard.
2. Benchmarking sales performance is poor.
3. Sales spend too much time on existing clients.
This paper shows senior decision makers how to determine demand, get the right mix of new business and account management and benchmark sales performance.
Determining salesforce size and composition
Understanding demand (how many genuine opportunities) your salesforce will be managing helps senior decision makers:
1. Size their salesforce.
2. Ensure it has the right mix of new business executives and account managers.
Demand is more important than size
Some markets are huge but that does not mean they are attractive. Mature markets, where the key players have developed relationships provide few new business opportunities. Winning new business in these environments means dislodging an existing supplier. It requires significant investment in time, resources and the outcome is not assured.
In these environments new business opportunities occur occasionally; contracts come to an end, an existing supplier falls out of favour, a change of personnel provides openings for new suppliers.
Smaller, growing markets provide a regular stream of opportunities. The challenge is more about focusing sales effort on developing profitable long term business rather than chasing every lead. Frequently telemarketers focus on quantity rather than quality; expecting salespeople to qualify opportunities.
In many ways the growing marketplace can create greater inefficiency: business may be growing, so managers’ focus is on winning as much market share as possible rather than winning that share efficiently.
Determining Demand
Analysing demand is simple:
How many organisations are entering the buying cycle for your goods and services at any one time?
Marketing can help to stimulate demand through traditional methods: PR, advertising, conferences and events. But imagine how effective your planning would be if marketing stimulated demand AND provided market intelligence AND developed leads.
Information led campaigns, which engage potential customers in dialogue with your organisation can:
1. Stimulate interest and demand.
2. Provide accurate information on the level of demand.
3. Generate qualified leads.
Information led campaigns highlight issues and problems that your products and services solve. Companies that are currently struggling with these problems will identify themselves by interacting with the campaign. The number and quality of interactions provides planning information: whilst the leads themselves will be passed to sales for follow-up.
If the material is interesting and worthwhile, if it helps senior managers do their job better; then your organisation will be accepted as a market leader – the sort of organisation your prospects will wish to do business with. As the quality and number of interactions increase, so does the relationship.
Ongoing information led campaigns show what demand there is for your services and products – helping senior management determine the size and composition of their salesforce.
Benchmarking Performance
It can be difficult to objectively assess a salesperson’s ability. Everyone has their own style: luck can help mask poor performance, milking an existing client can flatter figures and hard work can hide inefficiency.
Objectivity can only be achieved when every sales lead is the same. Co-ordinated information led campaigns deliver of similar quality to the salesforce. Apart from the immediate advantage of having salespeople engage with qualified opportunities, individual sales performance can be assessed against their peers and training or coaching needs identified.
By providing qualified leads the sales cycle is reduced. Prospects nurtured until they are ready to be passed to sales maximises efficiency – instead of salespeople taking 18 months to close business; they take 3 to 6 months. Your sales team are focused on what they do well: converting opportunities into revenue.
Salesforce responsibilities
Developing good quality leads requires a significant marketing time and effort. These leads have to be followed up systematically to ensure maximum return from investment. Handover criteria need to be agreed and information fed back into the marketing department so that messages can be further personalised and refined.
These are not leads in the traditional sense: prospects will have read your information and started to build up a relationship with your organisation. The ice has been broken; you will know what the prospect is interested in and where their pain points are likely to be. Salespeople are able to open meaningful dialogue immediately.
Rightsizing the Salesforce
Information led campaigns can determine the level of demand for a range of products in several market verticals. Using this information Directors are able to:
1. Decide how many salespeople are required to follow up generated leads.
2. Match the numbers of new business salespeople and account managers to market conditions.
Taking an information led approach delivers consistency in lead generation. Providing sales professionals with leads that are pre-qualified enables:
1. Directors to benchmark performance of their sales team.
2. Reduces the sales cycle: resources are focused on real opportunities, maximising sales efficiency and resource utilisation.
Summary
Businesses need to know that their expensive sales resources are operating efficiently and effectively. Unfortunately both sales and marketing tend to be a ‘black art’ and getting a true picture of individual and team effectiveness can be difficult. Traditional lead generation provides sales teams with mixed quality and a salesperson’s performance can be more due to luck (good or bad) than ability.
Getting the size and composition of the salesforce right can only be achieved if organisations know the quantity and quality of their leads. Information led campaigns provide Marketing and Sales Directors with a precise, timely picture of their marketplace: demand can be accurately assessed.
Generating leads through information led campaigns has a number of benefits. Perhaps the most useful is the control it gives to management: high quality consistent leads enable management to measure individual and team performance. It also shortens the sales cycle; ensuring resources are focused on profitable activity and maximising the return on investment.
Our second article, explores information led campaigns in more detail: how to set strategy and implement it. We take real results and show how organisations have benefited from a more enlightened, interactive, relationship building approach.
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Marketing Digitally since 2001, APM Digital clients include; Technology Companies, Professional Service Organisations, Manufacturers and Wholesalers.
Posted: July 2nd, 2009 / No Comments /
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