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Chartered Sales Force Analyst

Foundation Reading Compendium 2013

This subject guide is offered as part of the material for

the Level 1 curriculum of CSFA. For more information

about the program please visit our website

www.mercadeoedu.org

Contents

Foreword from academia 5 

Foreword from industry 6 

Introduction 7 

Aims and Objectives of the course 8 

Learning Outcomes 9 

Structure of the guide 10 

How to use this subject guide 10 

Essential reading 11 

Online study resources 12 

Journals and other resources 13 

Examination advice 13 

Part 1 – Strategy 15 

Science of sales force effectiveness 16 

Greater force in numbers or greater productivity? 16 

Putting Science into Sales 16 

Fixing targets 17 

Focussed offerings 18 

Optimized automation, tools, and procedures 18 

Performance management 19 

Sales force deployment 19 

So, how to sell smarter? 20 

Smartly allocating Time and Resources 21 

Account Potential 22 

Target the Right Prospects and Customers 24 

Deliver the Right Conversations 24 

Ensure the Right Behaviors 24 

Do the numbers 24 

Business cycles vis-à-vis sales strategy 26 

Role of the sales manager 28 

5 genuine sales management mistakes 29 

Sales Strategy 32 

Operationalising the strategy 35 

Return on sales effort 38 

Specific case of recession strategy 38 

Consumer behaviour in a recession 40 

Hypotheses for consumer behavior during the recession 41 

Sales of services 43 

Unique Circumstances 45 

Levers to maximize SFE 47 

Improving Lead & Pipeline Management 48 

Refining Channel Management 51 

Maximising the mix in selling 52 

Good ol’ discount schemes anyone? 54 

Types of discounts 55 

Downside of this strategy 56 

Creating and serving profitable customers 57 

Creating right incentive structure 61 

Channel Management 62 

What is a channel 63 

What is channel management? 64 

The channel establishment plans 66 

Channel Optimization 67 

ChannelMigration 67 

Channel Integration 68 

Channel strategy 68 

ROI for the channel 70 

Sales Strategy for evolving channels 72 

Part 2 - Structure 76 

Understanding consumer decisions 77 

Situational Factors That Affect People’s Buying Behavior 79 

Consumer’s Physical Situation 80 

Consumer’s Social Situation 80 

Consumer’s Time Situation 81 

Consumer’s Purchase Reason 81 

Consumer’s personality situation 81 

Consumer’s Perception 82 

Some academic insights 82 

Economic Man 83 

Psychodynamic 83 

Behaviourist 83 

Cognitive 84 

Humanistic 84 

Moving from selling a product to creating value for customer 85 

Cross check the sales steps 85 

Customer segmentation and sales objectives 87 

Value Proposition Definition 88 

Resource Prioritization and Channel Management 89 

Threat Board Analysis 90 

Marketing & Sales Training 90 

Special Situations 91 

Who should be involved in customer segmentation? 91 

What criteria should be used to segment customers 92 

What information should be known 93 

Sales Segments 93 

Effective segmentation 93 

Make segmentation work by emphasizing customer value and customer priorities 96 

Tailor the selling approach to suit customer needs 97 

Creating value across the Buying Process 98 

Sales process 100 

Designing the sales structure 104 

Free up the sales force to spend its time actually selling 105 

Close the capability gap with the right skills and the right tools 105 

Sales Force Dimensioning 107 

Sales forecasting 108 

Stage 1 – Estimate market demand 109 

Stage 2 – Estimate demand which can be captured 111 

Stage 3 – Pre sales plan and refine 111 

Part 3 - Process 112 

Performance & Incentivisation 113 

Motivation 116 

Structure incentives to reward profit and new value, not volume 117 

Designing a performce system 119 

Performace measures 122 

Commission and bonus options 123 

Part 4 - Systems 125 

Driving sales force effectiveness 126 

Thank You 128 

Contact us 129 

Foreword from academia

The way we sell and the way we do business in the 21st century is proving to be a very different proposition from the traditions established in the 20th century. Selling now requires a different philosophy and approach. Selling and service now go hand in hand so we all need to be much more proactive. There are now very few absolutes – everything is subject to evolution and reinvention. It is no longer just about doing deals but all about developing strong relationships that go beyond great products, great service and great design.

Fragmentation and segmentation are well and truly taking over from mass marketing. Sales and marketing teams will need to work together even more closely and take their listening skills to a whole new level. Smart firms will tune in to where buyers are electing to spend time and money. Ready or not, new consumer markets will emerge demanding different ways of doing business. This means sales teams will need to be even more targeted in their sales planning and prospecting efforts – no more scatter gun approach. Marketing teams will need to stop producing catch-all marketing materials that ignore buyer preferences and attitudes at their peril. Leaders will need to start looking at their strategy’s evaluation measures and start measuring marketing and sales teams on those same measures.

In the modern world, buyers needs are polarising between being completing simple transactions and navigating complex arrangements. If the former, the sales journey needs to be supported by systems and processes that make the transaction as quick and as efficient as possible. If the latter, organisation’s need highly skilled people as the primary points of contact engaging in a proactive consultative approach to selling. With access to so much information, buyers have grown more sophisticated and better informed consumers, especially in the B2B space. The savvy business person knows that many of those commodity purchases they have traditionally made face-to-face with a sales person, can now be made online thus saving their valuable time and money. 2012 saw the beginning of a massive restructure of transactional sales forces as clients go online, and ditch the ‘order taker’ who adds no value. Smart sales leaders know this sacred cow is no longer for this world and has already begun planning for a major transition into the blended world of online and personal selling. These leaders are choosing to invest in sales forces that educate clients on how to run a better business and achieve better results.

Corporate customers are seeking individualised value propositions and customised offerings that accelerate their business results. Empowered and informed by the Internet and influenced by their peers, these customers have come to expect control of their buying experiences. If you are accustomed to selling products and walking away, your business will be forced to prove how you add real value. So do not even for a minute, take your customers for granted, patronise them or treat them like idiots or you will hear about it via Twitter and Facebook or other social media channels where your future sales will be hung out to dry.

Smart sales professionals have always known that they need to calibrate where a prospective customer is

at before they start offering up products or solutions. They know their role varies along a continuum of

education to facilitation. By now, smart sales leaders know how to recruit in and develop their sales teams

to be educators, facilitators and not only product sales people. Their investment in the sales people will

result in a whole new skill set including patience, listening, creative problem solving and dealing with

ambiguity and complexity. Customers will come to value the new and improved sales approach because

going ahead, the customer, not the product, will be at the heart of the sale and they know the sales person

will help them make the right decisions moving forward.

Foreword from industry

There is not a single area of your life where you can not benefit from sales skills. Teachers use sales skills every day. Political and religious leaders use sales skills (albeit in different forms!). Consultants and i-bankers use sales skills. Mother Teresa used sales skills. And sales people use sales skills. Regardless of what you do, sales skills will increase your probability of success and your ability to motivate, instruct, encourage, coach, communicate and reach people.

The finest sales people in the world are helpful, not pushy. Some of the highest performing sales people are introverts, not the stereotypical extroverts. The most important attribute of any sales person is their attitude. The best sales person believes in the value of what they do and in their product or service, and their most important skill is to ask the right questions and listen to their buyer’s responses. The right questions will vary depending on the product or service, but in general terms they will work with their buyers, nurturing and learning about them to identify exactly what those buyers are looking for, what problems or concerns they want to solve and what outcomes they are seeking.

Then, and only then, a good salesperson will provide meaningful recommendations, suggestions, counsel, direction and advice on the buyer’s buying decisions and the products and services they should choose and the strategies they should use based on their personal experience of what actually works. This allows their buyers to make an informed decision based on what is in their best interest. And of course a good salesperson also needs to know how and when to ask for the order?

Introduction

Are great salesperson made or born? And what is the difference between sales and marketing? To be

precise what is the difference between the courses offered at multiple B-schools and the experience of

ground realities in sales. Irrespective of the strategy of the firm or the dazzle of the product line up, from

Unilever to Amazon, from pizzas to laptops - not to take away from the depth of product attributes or the

utility value, but a product can be a star or a dud depending on the efforts of the salesforce. In recent

times, the concept of four Cs1 has been introduced as a more customer-driven Sales force placement of

four Ps of marketing. And these 4 Cs - (consumer, cost, communication, convenience) – are the basis for

a concerted sales effort.

Today, most firms are smart enough to understand the impact of selling on success and such smart firms are turning selling into science. They are not depending merely on a few sales stars' built-in talents and on-field charm ‘n’ magic. Instead, they are reinventing their go-to-market approaches by using volumes of data, in-depth analysis and systematic tools to increase the productivity of sales members to boost the performance of all their average performers, up closer to the top quartile.

By taking a systematic and data-driven approach to reinventing their sales strategies, these organizations are better able to respond to changing market dynamics2. They are attracting the customers they desire, at a faster speed, and increasing average productivity across the sales force. Based on statistics available online, average sales per Sales force can increase by as much as 50% in two-three years, with most firms seeing increases in sales around 30%. As a result, these firms are growing at surprising rates. SAP America, for example, has more than doubled its software licensing business in three years, increasing its market share by 17 points3.

Firms who go a step further and actually implement this; tend to follow a few basic practices. Instead of setting the sales goals for every region and segment as merely an add-on to last years achievements, firms take the bottoms-up approach to setting sales goals. They gather market (consumer and competitive) data, then set growth targets in an iterative fashion to make them more realistic and more intuitive. Sales managers can use the data to develop accurate forecasts and set expectations for sales that are better aligned with corporate goals. Best-practice firms reach their (aggressive!) sales targets by increasing an individual Sales force's productivity and only then selectively (and judiciously) adding more "feet-on-the-street". To make sales-force productivity predictable and manageable, sales leaders tend to focus on four levers in an integrative approach.

i. Focussed offerings – selling our products and services to the most appropriate and hence the most profitable segments.

ii. Supportive automation tools and SOPs - Disciplined sales management processes supported strongly with tools and technology (POS scanners, SIM based tracking of large B2B consignments, CRM for organized retail etc).

iii. Performance management – aligning the metrics, incentives and importantly the training and development programs to prompt the right behavior and reward high – performers.

1 The authors here refer to Lauterborn's four Cs – students can refer for details to http://www.rlauterborn.com/pubs/pdfs/4_Cs.pdf  

2 According to Bain & Company's analysis available for reading at http://www.bain.com/publications/  

3 According to the Harvard Business Review artcicles available at www.hbr.org  

iv. Sales force deployment - covering the available opportunities with the right sales channels such as direct sales, indirect sales, TV-sales, e-sales at the right levels so that prospective and current customers can be serviced effectively and economically.

Successful firms are always asking, "How can I do better?" Cisco Systems, famed for its use of Web-based sales tools, draws information from a data-rich sales performance websites to improve its forecasting accuracy. The company recently provided its force with state-of-the-art personal digital assistants with custom applications for the devices that let force check all of their customers' recent activities. Like Cisco, smart sales leaders know they can no longer rely on their top sellers to sustain sales growth. One pharmaceutical services company has developed a multi-stage sales mentoring programme that pays a small commission to the mentor for the productivity of the sales during the programme. The overall goal is to narrow the gap between the stars and the rest of the sales force. Those firms that do it well have seen the sales of low performing force increases anywhere from 40% to 200%. But practitioners of the scientific approach also know that improved sales can vanish in an instant. Those sales leaders are already incubating their next generation of tactics and strategies so that they can continue to reinvent sales-force effectiveness.

Most fresh graduates of business have the impression that a sale is marketing and that the text-book curriculum corresponds to the ground realities. Often such grand ideas are brought to ground on day one of their internship or probation with a word from their immediate superior – “please leave what you have studied on the table and listen to me, ground realities are very different” or words to that effect. This myth is rooted in the belief that marketing is a “scoring subject” and hence abstract and “easy”. They forget that consultants and investment bankers (the primary high-salary “non-marketing” targets) have to make sales pitches as a routine part of their duties, though much of what they sell has been a matter of debate.

This course hopes to provide ample empirical and theoritical evidence to show that sales is a divison and specialization in its own right and that sales in fact forms the foundation stone and turning point of any product or its related campaign. It is particularly a relevant course for those of you who want to go on, to careers in developing sales promotions, pitches and effectively managing sales in organizations as diverse as P&G to CISCO.

This course complements, rather than displaces a number of other frequently taught courses, most obviously –Consumer Behavior, Sales Management, Channel Strategy and Services Marketing. We hope that you enjoy studying this course and learn a few further nuances of the fine art of selling.

AimsandObjectivesofthecourse

This course uses an on-the-field approach to examine the sales management process and analyse the roots of effective sales force management. The objectives specifically include:

i. To explain sales strategies, sales organizations as theoretical concepts.

ii. To analyse the development implications of different sales forms.

iii. To examine coordination in the increasingly complex institutional systems that characterise the most sales whether to business or by retail.

iv. To explore how characteristics of this complex inter-dependence are related to the persistence of high and low states of sales and what we as students of sales can do about it.

Ask yourself as a potential area sales manager?

Do you know, who your most profitable customers are and why? Or, who the most valuable prospects are? Does your sales team spend the majority of its time focusing on the highest-value targets?

Is your value proposition compelling and relevant for the highest-value segments? Do you tailor your selling approach and offering only by customer size and geography, or also by customer value?

Is your sales force coverage model organized to fully leverage your offerings? Do you have the right people with the right skills to deliver your value proposition? Are you maximizing the time that your sales force spends selling, versus the time it spends doing administrative tasks?

Is your sales training session(s) built around improving results? Does the sales force find them relevant? Does your sales force have the tools it needs to drive revenue and profit growth? Do your compensation system and evaluation metrics encourage behavior that is focused on value growth, not just on revenue growth?

LearningOutcomes

At the end of the course and having completed the essential reading and activities you should be able to:

i. Discuss what effective sales management constellations comprise, how they come about, and under what conditions they perish.

ii. Explain the role of incentives in sales behaviour and performance.

iii. Compare and contrast why certain sales structures are better suited to certain types of services and/or environments than others.

iv. Go and change the world.

Structureoftheguide

We aim to look at sales force effectiveness from 4 different yet inter-dependent lenses

We have attempted to distribute these topics under 2 levels – basic and advanced with both of them following the pyramid above and focusing on topics suitable for starters in this field and for students about to join or already in industry.

Topic  Sub‐topic  CSFA level 1  CSFA level 2 

Foreword  Analysing the sales function  

How to support the sales force to achieve more 

How complex can the sales model get?

    Sales force excellence – science and art

Strategy    Sales  segments   Coverage Model 

    Sales Strategy ‐ Dimensions   Strategic Sales Force Management 

    Levers to maximize sales force effectiveness 

How ready is your sales force? 

    Channel Management Stages‐of‐Excellence for SFE 

Structure  Market know‐how 

Understanding consumer purchase decisions 

Sales Forecasting  

    Customer Segmentation  Dedicated service sales force 

  Process  Sales process  Implementation aspects 

    Designing the sales structureSales Force Dimensioning  

Resource Deployment  Sales Territory Alignment  

    Sales Planning, Forecasting & Budgeting  Sales Force Utilization Management 

      Sales Talent ‐ Training, coaching 

Process   Management   Performance & Incentivisation  How to get the most out of your sales team 

      Sales Execution Support ‐ People, Process, Technology 

Systems  Implementation  Driving sales force effectiveness  Perfecting sales execution 

  Monitoring    How to conduct a diagnostic 

Howtousethissubjectguide

The aim of this subject guide is to help you to interpret the syllabus. It outlines what you are expected to know for each area of the syllabus, and suggests relevant readings to help you understand the material. There are no set textbooks which you must read for this course, but you will find that much of the

information you need to learn and understand is contained in examples and activities within the subject guide itself. If you are to succeed in this course, it is important that you complete the essential readings; the adjective ‘essential’ is not accidental.

We recommend that you work through the guide in chapter order, reading the essential texts beforehand. The activities provided will help to strengthen your understanding of key concepts, and to link them together. You may wish to supplement your studies by reading among the further references provided in each chapter. Where appropriate, useful internet resources are provided which you may take advantage of. These provide, data which you can use to explore particular topics further, case studies that illustrate specific points, or links to important organisations and research groups working on relevant issues.

It is important that you appreciate that different topics are not self contained. There is a degree of overlap between them, and you are guided in this respect by the cross-referencing between different chapters. In terms of studying this subject, the chapters of this guide are designed as self-contained courses of study, but for examination purposes you need to have an understanding of the subject as a whole. At the end of each chapter you will find a checklist of your learning outcomes, which is a list of the main points that you should understand, once you have covered the material in the guide and the associated readings.

Essentialreading

We would strongly advise students of sales & marketing to go through these books. While they are not textbooks in an academic sense, these are books which are rich with practical knowledge and can give you a booster dose of “ready-to-use” examples of success (and failure!). New editions of one or more of these books may have been published by the time you study this course. You can use a more recent edition of any of the books; use the detailed chapter and section headings and the index to identify relevant readings.

Good to Great: Why Some Firms Make the Leap… and Others Don’t - Good to Great is a book by Jim Collins that has stood the test of time. Jim Collins and a team of 20 researchers look to see what it took to take firms from good to great. The book covers eleven firms that Collins and his team considered to be great. They studied firms that delivered returned 3 times the market over a 15 year period. By using fifteen years it took the luck factor out of the equation. We like the entire book, but one of the key take aways for sales managers would be chapter two. Level 5 leadership. You will get a lot out of this section. This entire concept of good to great is truly fascinating. It is based on the fact that if you accept good, you can never become great.

The Accidental Sales Manager: How to Take Control and Lead Your Sales Team to Record Profits - Not everyone started off thinking they would be responsible for leading a sales team. Most people become sales managers because they were successful in the field. The problem is that when their success is based on the success of the team, they struggle. The most neglected position in the business world is that of the sales manager. This book takes a look at the role of the sales manager and how you can move from selling to managing with better success. Even if you have been managing for a while.

Don’t Fire Them, Fire Them Up: Motivate Yourself and Your Team - This is the story of a new sales manager taking on a new team, in a new city, that was not meeting the mark. Most people would just say if the sales-person are not getting it done, just get rid of them and start over. Frank Pacetta, the young manager and Author, saw it differently. He engaged the staff and found that with support and motivation, he could help them to grow and meet and exceed expectations. We recommend this to any sales manager that is looking to build a strong team and better understand

how leaders can develop their teams. We think you’ll find that this book will provide you with in sight and help you motivate your team and yourself.

Cracking the Sales Management Code – Quite simply, this is the data-driven sales manager’s bible. Beyond organizational leadership or individual coaching, this book is an operating manual for how to effectively manage a sales force. Jordan shows you why focusing on Results and Sales Objectives is completely wrong. Surprised? Well, yes, you should be! So read this book. He then identifies the key sales performance metricst hat all managers should focus on and the fundamental sales processes that will drive sales success. It is an eye opening book and critical to read and follow.

HBR’S 10 Must Reads: The Essentials - What the folks at Harvard Business Review did, was go through hundreds of articles and selected what they felt was essential reading for managers. The first book to read in the series is “The Essentials.” In the Essentials you get ten articles by authors like Michael Porter on creating competitive advantage and distinguishing your company from rivals. Peter Drucker on managing your career by evaluating your own strengths and weaknesses. Robert Kaplan and David Norton on measuring your company’s strategy with the Balanced Scorecard. Other articles include creating competitive advantage, leading change, using emotional intelligence, orchestrating innovation, and the one topic we love the most, “keeping customers loyal”. This is an excellent reference for any manager.

Strategic Selling - This is the masterwork when it comes to understanding how a company's sales strategy--and the execution of that strategy--can make or break a business model. Authors Robert Miller and Stephen Heiman (along with their amanuensis Tad Tuleja) detail the best practices of successful firms, showing how and why their strategies have worked.

Last but not the very least, Secrets of Closing the Sale – This book is not just about the close. But since the close is "payday" in selling, Zig included it in the title. He emphasizes that you have to cover "all of the bases" in order to reach the close. You have to find a prospective customer. You have to make an appointment to meet the prospect. You have to build an initial rapport and trust. You have to tell the prospect a good story. You have to answer the prospect's objections. Then you can close the sale. There are plenty of humorous illustrations and stories in the book to keep the reader involved. A lot of material was contributed to Zig by salespersons in the field to help keep the material fresh and up-to-date, although this book was published in 1984.

Onlinestudyresources

You are also advised to read a number of articles which are available online :

The Harvard Business review blog and case studies - written by professors at HBS and at renowned business programs worldwide and focus on actual problems and decisions firms face in multiple domains including sales management – Accesible at http://hbr.org/case-studies

The Bain & company publishes a brilliant set of articles on the sales effectiveness techniques pracised by several firms and their outcomes as caselets – these can be accessed at http://www.bain.com/consulting-services/customer-strategy-and-marketing/sales-and-channel-effectiveness.aspx

There are multiple excellent blogs on the internet which are rich with worldly-wise as well as academic wisdom. While we can not conduct a comprehensive assessment of all blogs out there, there are a few we would recommend :

You can refer at any time to www.mercadeoedu.org/mercadeowords which is the CSFA website discussion forum and start threads or refer to our write-ups from industry professionals and academia.

http://sethgodin.typepad.com/

http://www.rainsalestraining.com/blog/

http://www.salesgravy.com/women-in-sales/

http://www.omghub.com/

http://www.thejfblogit.co.uk/

and many more …

Journalsandotherresources

Please note that as long as you run through the essential reading you are then free to read around the subject area in any text, paper or online resource. You will need to support your learning by reading as widely as possible and by thinking about how these principles apply in the real world.

In addition to the subject guide and the essential reading, it is crucial that you take advantage of the study resources that are available online for this course, including the website and the Online Resources. You can access the website, the Online Resources via the Student Portal at: www.mercadeoedu.org

You should receive your login details in your study pack. If you have not, or you have forgotten your login details, please email us at support@mercadeoedu.org quoting your student number.

Examinationadvice

Important: the information and advice given in the following section is based on the examination structure used at the time this guide was written. We strongly advise you to check both the current Regulations for relevant information about the examination, and the website where you should be advised of any forthcoming changes. You should also carefully check the rubric/instructions on the paper you actually sit and follow those instructions.

Remember, it is important to check the website for:

Up-to-date information on examination and assessment arrangements for this course.

Where available, past examination papers and Examiners’ commentaries for the course which give advice on how each question might best be answered?

The Examiner attempts to ensure that all the topics covered in the syllabus and subject guide are examined. Some questions could cover more than one topic from the syllabus since the different topics are not self-contained.

Science of sales force effectiveness

Himanshu Chauhan leaned back in his chair, frowning. Head Office had asked for another 10% increase in

sales from his division this year, and guess whose KRA that goal would fall into? Wishing for the good old

days, when he could just announce a 10% target, spread it over all his regions, and then count on the

sales persons for each region and product to rake it in. Sure, some would fall short, but the real studs

would make up the difference. Today, the purchasing departments of Himanshu’s customers used

complex algorithms to choose vendors for routine buys; pure economics often scored over personal

relationships. For more complex sales, procurement teams wanted customized solutions. There is no way

one person could close those deals, no matter how much teen-patti/29 he or she played. Most of the time,

you needed a team of product and industry experts, not to mention strong incentives and a lot of back-

office support.

Real-life sales managers often face similar problems. Over the past few years, we have listened to these sorts of challenges with senior executives in Himanshu’s position. Even though the procurement world around them was changing, they were still selling by breaking down targets from higher management and religiously putting more runs and shorter TATs, in the hope that some of those new boys would once again save the day. Today, sales leaders are dramatically changing the way they run their teams. They are redesigning their sales approaches to respond to new market dynamics. They are expanding their lists of target customers beyond what was previously considered. They are increasing their sales force productivity not merely by hiring (or poaching!) the talented individuals but by helping the existing team to sell more.

Greaterforceinnumbersorgreaterproductivity?

What upcoming leaders have in common might be called a scientific approach to channel and sales force effectiveness. It is a method that puts science around the art of selling, relying not just on intuition, relationships and raw selling talent - the qualities of the wonder boy - but also on data, analysis, processes, and technical tools to redraw the boundaries of thinking and increase sales force’s productivity. The target is not to Sales forcelace wonder boys but to bridge the gap between the top quartile and the rest of the sales force. Firms that use the strategy well have found that, while even top sellers do better, sales people in the lower quartiles show strong improvement, with productivity hikes. Such hikes enhance the performance of the sales team as a whole and enable a company to reduce the expense of hiring new talent. The drama is in the results, not the details. As Rocket Singh would have put it “… even spiderman has to take risks, I am merely a salesman ...”

PuttingScienceintoSales

Chauhan’s first step was to recharge the way he segmented customers - by using the data collected from past transactions and enquiries. The new database held information such as standard industrial classification codes, the type of enquiries being classiifed, and so on. Then Chauhan asked his field managers to create an indicative list of characteristics for a potential customer, criteria that they believed would correlate with a customer’s likelihood of doing business with his firm. He took the features they came up with, ran regressions against the database of earlier interactions with these customers, and identified six criteria that had high correlations. If a prospective customer scored high on those selected

criteria—such as predicted capital expenditures and number of enquiries for upgrades - the probability that it would do business with his firm was high.

The division decided on its list of prospects based on these six attributes. Himanshu then worked on the new list for a while. Something interesting showed up. “We found that the top quartile of potential customers were three times more likely to do a deal with us than the bottom 3 quartiles” says Chauhan. In other words, that top group was made up of the new high-priority prospects only about half of them had previously been classified as attractive. The company had, in effect, identified a whole new set of new high-priority prospects that it would otherwise have overlooked!

But it was not just the increase in sales potential that made the difference; the new information also allowed Chauhan to redesign his sales force. e.g., he could take on the job of restructuring territories, ensuring that each one contained plenty of opportunities and hence equal hunting grounds. In some cases, that meant narrowing assigned areas based on the caliber of leads, re-evaluating territories, or creating new territories entirely. “When you target the market with a systematic approach,” Chauhan says, “you will never knowingly have territories that could intrinsically under-perform.”

On the performance management front, the data allowed Chauhan to get new and less-experienced force up to speed faster. “So much of the process of ramping up salesperson is just pointing them at the right targets,” he says. “If you can do that, you will get a big boost in productivity.”

Chauhan also used the information to support his sales force with new tools and processes for the field, such as targeted marketing campaigns that zeroed in on high-potential segments. Now every lead and piece of business generated gets tagged to a particular campaign. “It helps you to think about what worked, what did not, and where to double down and spend dollars for greater return on the marketing side,” says Chauhan.

The division’s $300 million in new business for 2005 reflects both an increased sales pipeline and a 19% higher rate of conversion, or closings, in a market the company once believed was maturing. That revenue, Chauhan notes, “is coming from customers that we know we would not have been calling on” without the new approach. “At the end of the day,” he says, “it is about building our business around customers and finding ways to help them grow.”

Fixingtargets

Fixing the annual sales objectives is any company’s first step in creating a sales plan. Like our Himanshu Chauhan, sales heads are used to setting goals based on management’s aspirations for the company top lines. Since such ambitions typically reflect wall-street expectations, they can not really be ignored. But sales managers too often apply the targets across every product SKU and customer region, without gathering the market (consumer behavior and competition) data that would make their goals more practical. Since variations across regions and segments are the norm, sales force often ends up with targets and quotas that are unrealistically high or low - either of which can demotivate a sales force.

To further understand how the new science of goal setting works, consider how Cisco Systems uses technology to forecast sales. The firm created an internal dashboard of a site where managers could log in and see up-to-the-minute sales performance, sliced by region, product line all the way down to the level of individual sales executives. This also contains data about executive’s pipelines, including the size of each opportunity, what kind of technology or upgrades the customer requested for, and who the potential competitors are. Managers hold “pipeline calls” regular intervals and renew forecasts derived from the data every week. They then roll up the numbers into weekly, monthly, and quarterly forecasts. “The forecast accuracy for our quarterly numbers tends to be within plus or minus 1% to 2%,” says Inder Sidhu, Cisco’s vice president for worldwide sales strategy and planning. Like other best-practice firms, Cisco is not sitting still. It provides its force with state-of-the-art PDAs, and custom applications for the devices designed to boost productivity. One program speeds up data entry; another lets sales force check their customers’

Sales Strategy

Each group or profession has a number of conventions that become deeply rooted in their ethos, some

stand the test of time and prove their value to the survival of the group over time; others fall as they are

challenged. There are a few which continue to be adhered to, by the masses even with their questionable

worth, and while a few members of the group move to alternatives, their demise is slow and damaging to

the well-being of those who continue to hold fast. Sales and sales person are no different; the “always be

closing” myth is one; the concept of “value proposition” based selling seems to have met its match with the

propagation of the “Procurement” and/or the elite edition “Strategic Sourcing” class. (Never understood the

strategic aspect here, please send us a note if you can explain!). Needs or pain based selling is slowly

proving to be ineffective, although still seems to be in vogue for many.

Another of these that is well entrenched is the whole notion of the positive karma attributed to “open-ended” questions, versus the constant bashing of “closed-ended questions”. More important is not the “type” of question, but how it is asked, and when it comes to that, the words used and the sequence are much more important than the “type”. And that is where the two words discussed here become important. Now how you ask a question and why, are far more important than if they are open or closed ended. So there you have them, the two words in question are: How and Why?

Once you focus on understanding how a company does things, and why they do it that way, you will discover all the things you need to make a sale. Lets cover off a couple of basics, first gone are the days when you can go in and ask what they do, with that information easily available on the web, just asking it puts you behind the curve. Same with sector specific trends, it takes literally seconds to get a handle on current trends, opportunities, threats etc. If you are talking to a manufacturer today in Southern China you should be aware of the impact of a strengthening yuan, off-shore competitors in Taiwan and Phillipines, and what have you. With simple tools like Google News, or other more specific services, it is easy to find out what is keeping them awake at night, asking that is no longer impressive. The second is that many sales people are reluctant to ask pointed questions that go to the heart of the matter. But if you do not ask those questions you risk missing the opportunity that lies at the heart of the matter. If the question is there, ask it!

Once you start using how and why as your lead questions you will be able to fully understand what the client is thinking, what the opportunity is, and how you can help them succeed. Let us take a simple example, you know they are using a competitive product/service, most force start positioning against the current provider. Many ask what they like about the current provider; some ask what improvements they would like to see if they could to the current product, hoping they will find that magical difference between the two products. Would not you really rather know how they chose their current provider, allowing you to understand how they make decisions. Would not you like to fully understand why they make decisions that way, in fact why they chose that specific provider over the others?

Asking why and how questions help you understand the individual you are working with, not just the organization, how they think, what may motivate them, and most importantly where they are in the decision hierarchy. We always hear from sales force that are frustrated by the difficulty in finding the real decision maker, or spending time with someone who lead them to believe they were “the” decision maker, who after having invested time and energy, is found to be not. Again, here asking how and why will reduce the stress and help you find the right decision maker. If you know how a prospect organization makes decisions, you will inevitably learn who needs to be involved in that process, and what their role in the process is. So if the last five times they bought a service like yours, the person you are working with met

Returnonsaleseffort

Specificcaseofrecessionstrategy

Rising unemployment, GDP losses, falling home prices, and a lack of consumer spending cause us to think this dismal global economy will continue through 2013 and perhaps deep into 2014 or later. Assuming we are right, following a sales strategy that amounts to paralysis is not a viable option. It will severely diminish a company’s market share and value. What then should a company do to make the best of a bad situation and not only survive, but position itself for better performance in the recovery? It depends. Sales strategy choices vary according to a company’s performance-driven strength/vitality relative to its competitors and the market’s enthusiasm for the company’s products/services. For example, stronger firms can be more aggressive than weaker competitors in how much and where they invest to harvest market enthusiasm. The challenges and corresponding strategy options are different when there is a growing demand for a company’s products than when the demand for products has matured.

  PLC 

stage 

Growing  Mature 

Product  / 

Services 

Demand 

Strong  Emphasize selling discipline and efficiency

Deploy additional resources to generate qualified leads, manage leads follow‐up 

Focus  sales  force  on  where  to  sell  –  identify highly propabale and probable customers 

Renfor  e  what  and  how  to  sell  –  insisting  on discipline  in  both  value  proposition  and  sales process 

Optimize selling time 

Blend  cross‐selling,  customer  penetration  and new customer selling – to shorten sales cycle and achieve an acceptable BD cost 

Manage discounting 

Pay high‐performers materially higher  to  induce aspirations 

Drive high perfocrmance with investments

Minimize voluntary sales force turnover 

Evaluate  sales  effectiveness  continually  – shore  up  with  training,  best  practices sharing, utilize automation tools 

Recruit  systematically  to  expand  and strengthen  resources,  identifying  and seeking traits of successful sales force 

Communicate  often  and  clearly  – challenges  and  opportunities  impacting customers,  product/service  strengths  to help  customers,  sales  priorities, expectations 

Maximize  granularity of perf  tracking  and Sales forceorting 

Reward high performers aggressively 

  Weak   Define  value  proposition,  cut  expenses  and  focus 

best resources to address cash position 

Use  solutions  oriented  sales  approach  to 

communicate  value  for  money  in  sales 

collateral, advertising and releases 

Terminate weak performers 

Focus  on  nature  of  customer  relations  and 

value delivered to strengthen / expand base 

Strive  for  consultative  customer 

relationships – value proposition to be mix 

of  customer  needs  and  product/service 

attributes 

Ensure best  relation  resources are mapped  to 

most  valuable  customers  ‐    to  retain  loyal 

business 

Team  products/service  experts  and  proven 

BDers  /  closers  against  most  valuable 

prospects – bolster sales pipeline and  improve 

win rate 

Conduct  win/loss  post  mortems  to  verify 

customer  needs  are  being  identified/met  and 

crete do’s/don’t’s for future sales competition 

Use  new  headcount  combined with  economy 

reflecting  quotas  and  elevated  commission 

rates to balance compensatin cost of sales 

Use  product/service’s  track  record  of 

creating  revenues  or  reducing  costs  to 

cnvert competitor’s customers 

Focus  on  price  realization  –  minimize 

discounting  in  the  value  selling 

environmentOpportunistically  upgrade 

salesforce 

Monitor  forecast  accuracy  and  strive  to 

close  deals within  forecasted  parameters 

of time, quantity, cost, conditions 

Regular sales  force process reviews, make 

sure process is aligned to customer needs 

Strong  attention  to  top  performers  – 

celebrate  success,  recognize  alongwith 

compensations 

It would not do any good for firms to just buckle up and hang on for their lives during the potentially wild roller coaster ride leading to economic recovery. Get the self-assessment done and then design and implement your strategy. Make sure salesperson know they must sell within their sales strategy. Wasted time is lost revenue, profit and company value in every economic climate. Get moving and keep moving, but move deliberately. Understanding your potential customer has never been more important and is the basic tool in developing retail strategies and tactics for maintaining and increasing income in a recession. After honing in on your USP for the short-term “value for money”, the sales person must be able to forecast sales potential from various customer segments, including their interests, age, gender, values, activities, buying patterns and personal styles. We all can do a few things differently in these times.

Get out and walk amongst your consumers and observe. In addition to reviewing current guest surveys and marketing demographic studies, merchandisers can get out in their facilities and observe the guests: What are they using? How do they approach or move through the store? What are they drawn to? What do they pass up? Look at recent sales results: What are they buying? What price points are the most successful? What categories are still strong?

Prioritize your customer segments/product niches. Begin sorting out how each customer segment affects your earned income in terms of sales margins, operational expense, audience volume, and growth potential. For example: Do these customers require special sales service with extra time and effort by a sales associate or do they prefer self-service? Does this customer group expect low retail prices which narrow the profit margins or do they buy the most profitable category of merchandise? How large is this customer base? Are there barriers to gaining or losing sales from this group? Is there a potential growth in this segment? How does each segment make their buying decisions? Use a matrix to get a simple view of how each customer segment sales potential falls in relation to the others. A prioritization can be made based upon which group has the highest probability to bring in the most income. This prioritized customer segment list should provide the merchandising team a clear picture of the groups upon which to focus attention and investment.

Make each prioritized customer segment real for your merchandising team. Identify the principal customer niches and develop model profiles. Brainstorm each customer segment’s mind set: What would make them come in to your store? What would make them buy in your store? What movies or sporting events will they be watching? What will they care about? Ask yourselves why would they buy something from you? What are their styles in terms of fashion and home decor? What kinds of books would they read? List out what you can do to provide the right products, displays, price points, promotions, special store events and offers that will appeal to each customer segment.

Levers to maximize SFE

Sales Force automation (SFA) was intended to help systematize the selling process and provide

management with visbility into sellers’ activities, but this approach does not necessarily make sales more

effective. Today, the goal should be to help sales people spend more time selling and less time performing

back-office tasks. But how can organizations get the most from sales tools to achieve the best possible

outcomes while still providing strategic decision makers with the information they need improve their

business?

Sales leaders when confronted with this dilemma need to have a working strategy to go around the same. Firstly, they would need to protect their core customer franchisee sets by identify and focussing on such critical customer segments. And, subsequently introducing both strategic and tactical changes (/ improvements) in their sales and channel management processes, where it matters most. Most such interventions need more than having the right sales value propositions, resources/ support systems, and consistent alignment with the organization’s strategic goals, – They requires interventions with metrics to guide the salesforce to “behave like owners if not become owners” to deliver profitable growth.

The best of sales organizations seek and drive improvements in productivity and growth at all times for that superior and competitive edge. They use the right combinations, with the right change management plan, and focus their sales teams and channel partners on segmentation strategies, which positively impacts, revenue and share. More than that, they create a high-performance organization pulling together for breakthrough financial results to add great value – and lend that sharp edge over competitors. As most sales force desire to tell HO “… sir, you please give me this brand support – and come sun or rain ‘I will do’ my numbers – This is my territory and I will ensure no competitor ever wins here…” In sum, salesforce effectiveness is all about that street-by-street, town-by-town and account-by-account winning. And celebrating! Of-course.

Why does this disconnect happen? After all, markeing grads the world over study dozens of frameworks and often employ them to analyse and drive sales further. So why these leaks do happens? Consider this for a B2B environment.

Sales process

We all have heard it - we are all sales people! As with any operational function, there should be some type

of process or step by step way of doing it. Following a process, with Sales forceetition and practice, has

been proven to contribute to a positive outcome. Yes, you guessed it! There is a process to selling - known

as the sales cycle. Some businesses sell products, some sell services, some a combination of both. A

sales process or cycle applies to pretty much anything that you are selling. There are many variations of

the sales cycle, but there is also a set of basic steps. Keep in mind that not all of these steps may fit your

type or style of business and if they don’t, that’s ok. Modify them to fit your needs. Most salespeople and

business owners use these basic steps as a starting point to creating their own sales process.

First off, let us examine the word “sell”. The word comes from a Norwegian, “Selje”, and means “to serve”. The word “sell” come from the verb “to serve”. So selling is really serving. The type of selling in this course is about serving: it is not just about selling, not just about jamming a product down someone's throat, as it may end up as a sale. It requires you to listen to the client, rather than trying to sell him without listening. The idea is to listen to them before trying to sell anything. The key to selling is listening, and by listening you serve. When a sales person actually listens to someone, they serve him or her.

The hiring manager looks across the table and ask you to tell him/her about the sales process that you

will use day in and day out? What will you say? “It is my personality.” “I am a people person and people

like to buy from me” “I work harder than the other competitors.” Chances are you will be shown the door

very quickly after one of these generic responses.

What the interviewer is looking for is to see if you have an established process for the time when you are

in front of the customer or buyer. What type of sales skill development training have you had? Is it

Consultative Selling, Spin Selling, Xerox Professional Selling Skills I & II, Face to Face Selling or some

other corporate sales training? Fortunately, most Fortune 500 sales people go to corporate sales training

Driving sales force effectiveness

When it comes to enhancing sales force productivity and performance, it's tempting to look for silver

bullets. Is customer retention declining? Okay, let's roll out a new sales training program that teaches

salespeople how to be more customer-focused. Is sales growth lagging? Let's implement a more

aggressive incentive plan to motivate the sales force. Is sales productivity decreasing? Let's build a Big

Data solution that enables salespeople to glean insights so they can sell smarter. One-dimensional

solutions like these are rarely enough to create permanent improvements in sales force effectiveness. A

sales force is complex, with many moving parts and interdependencies. Achieving sales force excellence,

or addressing a sales opportunity or challenge (such as revitalizing growth or enhancing customer

retention), typically requires improving upon a mixture of several sales force effectiveness drivers.

Excellent sales forces also ensure compatibility across these types of programs. For example, if sales strategy calls for penetrating a new market segment, they enable the strategy with the right sales process, an appropriate sales force size and structure, training and coaching programs, and data and tools that facilitate salespeople's success. If salespeople have unequal market potential, they design performance management and incentive programs that account for territory differences, or they realign territories to give all salespeople a fair opportunity to succeed.

Vendors and their customers (channel partners or enterprise buyers) rely heavily upon each other for business success. Yet, what should be perceived as a partnership is often rife with conflict. Perhaps the leading causes of these relationship gaps are apparent conflicts in goals between vendors and their customers. Each business desires growth. Yet, institutional priorities often drive decision making. Unfortunately, in many B2B relationships, these priorities often fail to consider the implications that they may have on another entity.

Sales person’s business  Sales force Goal  Salesforce execution Channel Customer Enterprise Customer

Manufacturing/ Development 

Increasing volume reducesfixed  costs  per  unit  and recoups R&D expenses 

Product Push 

The vendor sales force does  not  understand how we make money 

The vendor sales force does  not  understand my business 

    Adoption of new technology The vendor sales force expects  us  to  be guinea pigs with  their unproven technology 

The vendor sales force is minimizing how we use  our  technology today 

Distribution   

Increasing  inventory  turns reduces  likelihood  of holding  ptoducts  with declining demand 

Channel  load  /  unload incentives  Enterprise incentives 

The vendor sales force is  trying  to  move product  that  my customers  do  not want 

The vendor sales force will  automatically lower  prices  at  the end  of  the  current quarter 

Service   

Post  sale  consultation  nd implementing creates new revenue streams 

Enterprise aocunt growth 

The vendor sales force is  attempting  to  steal our best accounts 

The vendor sales force only cares about what I buy, not  what I need 

    SMB Growth The vendor sales force wants to steal more of our accounts 

The vendor sales forcehas  too  many opportunities on  their plate to be effective  

As sales leaders face an ever-changing market, any laundry list of drivers of sales forces efficiency — a list of activities that require constant attention and improvement — can look daunting. That's where a clear head and a purposeful prioritization process come in handy. We suggest that you rethink a few key of these drivers at any point in time.