PROFESSIONAL SELLING AND SALES MANAGEMENT PROF DR DEVA RANGARAJAN Reflection

PROFESSIONAL SELLING AND SALES MANAGEMENT

PROF DR DEVA RANGARAJAN

Reflection

WHAT IS SALES FORCE EFFECTIVENESS?

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$800 BN VS $200 BN

120 VS GREATER THAN 500

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OBJECTIVE

Identify some general trends in sales force management

How are companies trying to deal with generating growth using the sales force.

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Prof Dr Deva Rangarajan5 © Vlerick Business School

THE SELLING WORLD

Source: Zoltners et al., Building a winning sales team, 2009

Company

Companystrategy

Marketing andsales strategy

Sales force

Environment

Customers

Competition

Results• Customer• Company

Externalforces

Sales system

Effectiveness hunt

• Company goals and objectives• Mergers and

acquisitions• Product

portfolio strategy

• Market segmentation• Value

proposition• Sales process• Go-to-market

strategy

• Market segmentation• Value

proposition• Sales process• Go-to-market

strategy

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INSIGHTS: EXTERNAL ENVIRONMENT

Six things keeping sales executives up at night:

Source: Neil Rackham session at the Global Sales Science Institute meet- Milan 2011

1. The end of the “better mouse-trap” model

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1. MOVE TOWARDS SOLUTIONS

The move towards solution selling

Easier said than done:

1.Resistance to change

2.Silo Mentality

3.New capabilities and skills needed

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INSIGHTS: EXTERNAL ENVIRONMENT

Six things keeping sales executives up at night:

Source: Neil Rackham session at the Global Sales Science Institute meet- Milan 2011

2. The death of F2F transactional selling

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Transactional selling

Enterprise selling

Consultative selling

2. FACE TO FACE SELLING?

Transactional selling

Consultative selling

PAST PRESENT

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INSIGHTS: EXTERNAL ENVIRONMENT

Six things keeping sales executives up at night:

Source: Neil Rackham session at the Global Sales Science Institute meet- Milan 2011

3. Unsustainable hybrid sales force

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3. HYBRID SALES FORCE

“Why should my salespeople be taking business away from small stores while they should be robbing banks” adapted from a quote by Larry Ellison- CEO, ORACLE

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INSIGHTS: EXTERNAL ENVIRONMENT

Six things keeping sales executives up at night:

Source: Neil Rackham session at the Global Sales Science Institute meet- Milan 2011

4. The ever extending sales cycle

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4. EVER EXTENDING SALES LIFE CYCLE

More complex products/service offerings

More members in the customer organization involved in the decision making

Rise of the global customer/shared alliances

Need to invest early in the sales cycle

Creates more stress on salespeople and other functions internally: production, operations, finance

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INSIGHTS: EXTERNAL ENVIRONMENT

Six things keeping sales executives up at night:

Source: Neil Rackham session at the Global Sales Science Institute meet- Milan 2011

5. The decline of RFP selling

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5. THE PROBLEM WITH RFP/RFQ SELLING

The problem with RFP/RFQ selling today is that at this stage, value creation opportunity is limited

80% of the decision has been made

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INSIGHTS: EXTERNAL ENVIRONMENT

Six things keeping sales executives up at night:

Source: Neil Rackham session at the Global Sales Science Institute meet- Milan 2011

6. Skyrocketing costs of chasing an opportunity

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6. SKYROCKETING COST OF CHASING AN OPPORTUNITY

Do you know what it costs you to chase an opportunity?

How can you be sure that your customer will end up buying from you after all the effort you put into chasing an opportunity?

Prof Dr Deva Rangarajan18 © Vlerick Business School

THE SELLING WORLD

Source: Zoltners et al., Building a winning sales team, 2009

Company

Companystrategy

Marketing andsales strategy

Sales force

Environment

Customers

Competition

Results• Customer• Company

Externalforces

Sales system

Effectiveness hunt

• Company goals and objectives• Mergers and

acquisitions• Product

portfolio strategy

• Market segmentation• Value

proposition• Sales process• Go-to-market

strategy

• Market segmentation• Value

proposition• Sales process• Go-to-market

strategy

Prof Dr Deva Rangarajan19 © Vlerick Business School

FIVE STRATEGIES FOR SALES GROWTH

Find growth before competitors do

Sell the way your customers want

Soup up your sales engine

Focus on your people

Lead sales growth

Source: Sales Growth: Five Proven Strategies from the World’s Sales Leaders by Thomas Baumgartner, Homayoun Hatami, and Jon Vander Ark

Prof Dr Deva Rangarajan20 © Vlerick Business School

1. FIND GROWTH BEFORE YOUR COMPETITORS

Look 10 quarters ahead

Mine growth beneath the surface

Use big data

Prof Dr Deva Rangarajan21 © Vlerick Business School

2. SELL THE WAY YOUR CUSTOMERS WANT

Master multi-channel sales

Power growth through digital channels

Involve sales early with the customers

Invest in partners for mutual benefit

Prof Dr Deva Rangarajan22 © Vlerick Business School

3&4. SOUP UP YOUR SALES ENGINE

Company results

Sales force structure and

roles

Customer results

ActivitiesSalespeople

Definers Shapers Exciters Enlighteners Controllers

The Sales force effectiveness drivers

The Sales SystemForces outside the Sales

System

Company factors- R&D- Operations- Finance- Marketing- Product

offering- Pricing- Services- Channel- Strategy

Environment- Market growth- Competition- Consolidation- Government- Technology- Random

Shocks

Source: « Sales Force Effectiveness : A Framework for researchers and practitioners » by Andris Zoltners, Prabhakant Sinha and Sally Lorimer, Journal of Personal Selling and Sales Management, Spring 2008

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SALES FORCE EFFECTIVENESS DRIVERS

Shapers

- Recruiting- Training- Coaching- Culture formation- Compensation

Enlighteners

- Customer Research- Targeting- Data and tools- Customer relationship management systems

Exciters

- Leadership- Compensation- Motivation programs- Meaningful work

Controllers

- Performance Management- Coordination systems- Vertical and horizontal communication- Compensation

Definers

- Sales strategy - Customer segmentation - Customer offering - Sales process- Go-to-market strategy- Sales force design - Structure and roles - Size - Territory alignment

- Skills- Capabilities- Values

- Customer insight

- Inspiration- Motivation

- Expectations- Success measures

- Roles- Territories- Selling Process

Impact

ImpactThe Sales job The Salesperson

Salesperson / activity

Source: « The Sales Force as an engine of organic growth » by Bernard Quancard and Andris Zoltners, Velocity 2009

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Practices

Transactional customers: channel partners and e-commerce initiatives

Key customers: KAM/RAM/GAM

Structure: Geographical/Matrix

Issues

E-commerce; no structured policy towards managing channel partners

Cross/Upselling: Silo mentality

Field support for RA/KA including resource allocation/sharing

Cross-border pricing issues

INSIGHTS- DEFINERS

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Practices

Sales force sizing: Ad-hoc

Roles: Usual suspects/new team selling roles to support solution sales

Issues

Workload method: Used only by some companies to size sales force

Using existing sales force to fulfill new roles

INSIGHTS- DEFINERS

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SALES FORCE EFFECTIVENESS DRIVERS

Shapers

- Recruiting- Training- Coaching- Culture formation- Compensation

Enlighteners

- Customer Research- Targeting- Data and tools- Customer relationship management systems

Exciters

- Leadership- Compensation- Motivation programs- Meaningful work

Controllers

- Performance Management- Coordination systems- Vertical and horizontal communication- Compensation

Definers

-Sales strategy - Customer segmentation - Customer offering - Sales process- Go-to-market strategy- Sales force design - Structure and roles - Size - Territory alignment

- Skills- Capabilities- Values

- Customer insight

- Inspiration- Motivation

- Expectations- Success measures

- Roles- Territories- Selling Process

Impact

ImpactThe Sales job The Salesperson

Salesperson / activity

Source: « The Sales Force as an engine of organic growth » by Bernard Quancard and Andris Zoltners, Velocity 2009

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Practices

Recruit: Customers/Competition/General sales experience/College Graduates with experience

Training: Product/Commercial skills/leadership skills based on IDP/PDP/PDR

Issues

Recruit: Customers/Competition- quick growth, but stagnate

Recruit College Graduates: Lack of university programs with sales curriculum

Training: Lack of specific sales management

INSIGHTS: SHAPERS

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Practices

Coaching: Increased focus/ sales manager evaluation criteria

Compensation: a lot of focus paid on this issue

Issues

Coaching: Lack of time/span of control issues

Compensation: Incentives to facilitate cross-selling.

INSIGHTS: SHAPERS

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SALES FORCE EFFECTIVENESS DRIVERS

Shapers

- Recruiting- Training- Coaching- Culture formation- Compensation

Enlighteners

- Customer Research- Targeting- Data and tools- Customer relationship management systems

Exciters

- Leadership- Compensation- Motivation programs- Meaningful work

Controllers

- Performance Management- Coordination systems- Vertical and horizontal communication- Compensation

Definers

-Sales strategy - Customer segmentation - Customer offering - Sales process- Go-to-market strategy- Sales force design - Structure and roles - Size - Territory alignment

- Skills- Capabilities- Values

- Customer insight

- Inspiration- Motivation

- Expectations- Success measures

- Roles- Territories- Selling Process

Impact

ImpactThe Sales job The Salesperson

Salesperson / activity

Source: « The Sales Force as an engine of organic growth » by Bernard Quancard and Andris Zoltners, Velocity 2009

© Vlerick Leuven Gent Management School

Practices

Customer Research: Increased importance of strategic marketing

Data and Tools: Value propositions, pricing policies, distributor management

CRM: Perceived Benefits/ Ease of use, link to soft KPIs

Issues

Customer Research: Sales vs marketing

Data and Tools: Centrally/Regionally developed

CRM: Value communication, Usage rates, centrally implemented, big brother

INSIGHTS: ENLIGHTENERS

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© Vlerick Business School

SALES FORCE EFFECTIVENESS DRIVERS

Shapers

- Recruiting- Training- Coaching- Culture formation- Compensation

Enlighteners

- Customer Research- Targeting- Data and tools- Customer relationship management systems

Exciters

- Leadership- Compensation- Motivation programs- Meaningful work

Controllers

- Performance Management- Coordination systems- Vertical and horizontal communication- Compensation

Definers

-Sales strategy - Customer segmentation - Customer offering - Sales process- Go-to-market strategy- Sales force design - Structure and roles - Size - Territory alignment

- Skills- Capabilities- Values

- Customer insight

- Inspiration- Motivation

- Expectations- Success measures

- Roles- Territories- Selling Process

Impact

ImpactThe Sales job The Salesperson

Salesperson / activity

Source: « The Sales Force as an engine of organic growth » by Bernard Quancard and Andris Zoltners, Velocity 2009

© Vlerick Business School

INSIGHTS: EXCITERS

Motivation Programs

1. Sales Competition at local/regional/global level to highlight talent for salespeople/sales managers

2. Sales Contests

3. Promotions

4. Training programs for high potentials

5. Special career paths

6. Merit Increases

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© Vlerick Business School

SALES FORCE EFFECTIVENESS DRIVERS

Shapers

- Recruiting- Training- Coaching- Culture formation- Compensation

Enlighteners

- Customer Research- Targeting- Data and tools- Customer relationship management systems

Exciters

- Leadership- Compensation- Motivation programs- Meaningful work

Controllers

- Performance Management- Coordination systems- Vertical and horizontal communication- Compensation

Definers

-Sales strategy - Customer segmentation - Customer offering - Sales process- Go-to-market strategy- Sales force design - Structure and roles - Size - Territory alignment

- Skills- Capabilities- Values

- Customer insight

- Inspiration- Motivation

- Expectations- Success measures

- Roles- Territories- Selling Process

Impact

ImpactThe Sales job The Salesperson

Salesperson / activity

Source: « The Sales Force as an engine of organic growth » by Bernard Quancard and Andris Zoltners, Velocity 2009

© Vlerick Leuven Gent Management School

Practices

Performance management: Central guidelines, decentrally implemented

Criteria adjusted for sales profiles

Focus more on hard measures than soft ones

Limited number of KPIs

Issues

Performance management: Too many exceptions

Heterogeneity in maturity of sales profiles in different subsidiaries

Move towards solutions/services makes actual margin calculation difficult

INSIGHTS: CONTROLLERS

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5. LEAD SALES GROWTH

Lead from the top

Create a continuous learning environment

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CONCLUSIONS

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Company

results

Sales force structure and

roles

Customer resultsActivities

Salespeople

Definers ShapersExciter

sEnlighten

ersControlle

rs

The Sales force effectiveness drivers

The Sales System

IMPLEMENTATION VS. DIAGNOSIS

Source: « Sales Force Effectiveness : A Framework for researchers and practitioners » by Andris Zoltners, Prabhakant Sinha and Sally Lorimer, Journal of Personal Selling and Sales Management, Spring 2008

Implementation

Diagnosis

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SET UP A BALANCE SCORECARD TO PRIORITIZE

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Fix it. NOW. High five!

You can afford to procrastinate

There are bigger fish to fry

Impact of the drivers on

performance

Current performance on the driversLOW HIGH

LOW

HIGH

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SUGGESTIONS

Over resource the best opportunities

Take opportunity selection out of the hands of the salespeople

Involve marketing and marketing tools in opportunity selection

Push transactional opportunities to cheaper channels

Develop clear strategies to manage channels

Upgrade the consultative selling effort

Equip your sales managers to deal with managing the sales force during this transition

Prof Dr Deva Rangarajan40 © Vlerick Business School

CURRENT RESEARCH PROJECTS

Key Account Effectiveness: focus groups with Deloitte

Characteristics of Successful Salespeople: IBM faculty research grant

Drivers of sales force effectiveness: CPI Consulting

THANK YOU!

DEVA.RANGARAJAN@VLERICK.COM