Investing in a sales teamRichard Brooks19th May 2011.

Where were we…

Crisis of LEADERSHIP

Crisis of AUTONOMY

Crisis of CONTROL

Crisis of RED TAPE

Crisis of ???

Growth via CREATIVITY

Growth via DIRECTION

Growth via DELEGATION

Growth via COORDINATION

Growth via COLLABORATION

Larry Greiner, “Evolution and revolution as organizations grow”, Harvard Business Review August 1972

Stage 1 Stage 2 Stage 3

Stage 4

Stage 5

Crisis of LEADERSHIP

Crisis of AUTONOMY

Crisis of CONTROL

Crisis of RED TAPE

Crisis of ???

Growth via CREATIVITY

Growth via DIRECTION

Growth via DELEGATION

Growth via COORDINATION

Growth via COLLABORATION

Larry Greiner, “Evolution and revolution as organizations grow”, Harvard Business Review August 1972

Key source of turbulence coming out of stage 1 is investing in a sales team.

Employing a sales team = PAIN

Stage 1 Stage 2 Stage 3

Stage 4

Stage 5

The ProcessKeep your sales people well fed with quality leads

Social media

Marketing

Newsletter

Website SEO & SEM

Cold Calls

Account &Key Account Management

Marketing Sales closed

DRIVE THE PIPELINE

Blog

Leads

Qualified leads

Opportunities

Proposals

Win

Lose

Negotiation

Trade shows

Pipeline ModelCuts through bullshit/shows Net Present Value

Leads Qualified Leads Opportunities

Don’t stop the sausage machine

Value Value Proposals Value Lost Value Won Value

Starbucks

Microsoft

Eli Lilly

FedEx

Ernst & Young

$45,000

$65,000

$25,000

$150,000

$100,000

$565,000

Yahoo HR material

Autodesk packaging

Ikea catalogue

Intel R&D

Nike Sports Website

Dell user guides

$50,000

$15,000

$25,000

$5,000

$10,000

$50,000

$155,000

I’ve got loads of

leads boss.

NASA Tech manuals

Blackberry strings

Amex website

Costco food labels

$5,000

$7,000

$25,000

$5,000

$42,000

5% 10% 25%

Present Value

Pipeline valued at:$54,500(and not $762,000!!!)

$28,250 $15,500 $10,500

Opportunities must have a name, value and date.

Sales Guy Report

What I did this week.1. 2. 3.

What I didn’t do this week.1.2.3.

What I’ll do next week.1.2.3.

Web trafficPages indexedSearch Engine positionCost per leadCost per $ returnedCampaign cost & ROI

Leads per channelBusiness closed (by AM)Business lost (by AM)New business/repeatProspecting calls/AMPipeline net present value

But…Building relationships is much more profitable than selling stuff.

Why? --->>>

Marketing Sales

Key Metrics“If it matters, measure it and put it on the wall” – Randy Morgan

Build the metrics into your CRM

Profi

t

time

Cost

(to

serv

e a

cust

omer

)

Year 1 Year 2 Year 3 Year 4 Year 1 Year 2 Year 3 Year 4

time

Cost of Customer ServiceThe cost to serve your customers decreases over time

The Acquisition Cost of a Customer(Marketing)

Sometimes used as a model for pricing strategies. And will map to each stage in a firm’s development.

The Experience Curve(Economics)

Relationship ManagementResponding to modern market forces

Solution selling

Value not price

Key Account Mgmt

Business to business relationship

Market forces in business to business relationships

Supplier responses

Globalisation

Market maturity

Customer power

Key Account ManagementAccounts which are of strategic importance

Top 15

Next 30

Next 55

Clients Customer Lifetime Value

$$$

$$

$

See your customers in terms of lifetime value (and not a series of one off transactions).

Some clients may be key because they open doors for you.

- From a model developed by M McDonald – Cranfield University

The Ladder of LoyaltyMoving your key accounts up the ladder

Suspect

Prospect

Customer

Client

Support

Advocate

Partner

5% increase in customer retention leads to a profit improvement of at least 25% in NPV of future earnings.

- From a study by Reichheld & Sasser. Harvard Business Review. September 1990

• 96% of dissatisfied customers never complain but 90% of them never return.

• ONE happy customer tells at least NINE others• 13% of unhappy customers tell at least twenty others• It takes five times as much effort, time and money to

attract a new customer than it does to keep an existing one.

- Source: USA White House Office of Consumer Affairs

Mutually rewarding relationship where neither party intends on leaving.

Value of Business

Attitude of Customer (Market Share)

High Med Low

Friendly (major share of spend)

Neutral (equal share of spend)

Unfriendly (minor share of spend)

Tea and Biscuits customer

Why bother?

Key question.Where should the sales people spend their time?

Sales people say ‘tea and biscuits’… but that’s wrong.

Salesforce StrategyWhere should your sales people spend their time?

Value of Business

Attitude of Customer (Market Share)

High Med Low

Friendly (major share of spend)

Neutral (equal share of spend)

Unfriendly (minor share of spend)

Tea and Biscuits customer

Why bother?

Its similar to the boston box – but closer to what we actually do in sales management.

i.e. focus your sales resources on the areas with the greatest potential.

Manage costs to Serve

Maintain and Grow Relationship

Potential

Change Strategy

Salesforce StrategyWhere should your sales people spend their time?

Directors

Managers

Translators

Studio

Accounts

Sales guy

Your Company Your Customer

Directors

Managers

Writers

Studio

Accounts

Buying guy

Traditional relationship.Means that the sales guy is incredibly valuable (they like this) and will get head hunted by the bigger companies to work for them (they like this as well).

Lose the sales guy lose the client.

Client RelationshipBasic/Exploratory relationship

Directors

Managers

Translators

Studio

Accounts

Key Account Manager

Your Company Your Customer

Directors

Managers

Writers

Studio

Accounts

Buying guy

A much stronger relationship.

If the sales guy goes… you’re more likely to keep the client.

This relationship can then develop… R&D teams can merge, teams on customer site, joint board meetings, joint strategy development and social events.

This guy picks the team and manages the relationship.

IF the customer wants one point of contact then rotate this person every 6 months.

“We have 50,000 moments of truth every day”Jan CarlsonPresident, Scandinavian Airlines

Client RelationshipInterdependent relationship

Sales and Key Account ManagersThe differences between sales people and key account managers

Sales Person•Main task is ‘getting the order’•Manages large amounts of customers•Measured on number of sales calls, volume of business, top line revenue…•Hunter•Works alone•Low basic, high performance related commission

Key Account Manager•Main task is developing long term relationships•High involvement with customers over a long term period•Manages small numbers of customers•Measured on Customer Lifetime Value•Farmer•Works in teams•High basic, lower performance related commission

So… as you get into the world of Key Account Management your best Sales People may not convert to Key Account Managers.

Crisis of LEADERSHIP

Crisis of AUTONOMY

Crisis of CONTROL

Crisis of RED TAPE

Crisis of ???

Growth via CREATIVITY

Growth via DIRECTION

Growth via DELEGATION

Growth via COORDINATION

Growth via COLLABORATION

Stage 1 Stage 2 Stage 3

Stage 4

Stage 5

$500kInvestment in sales team.

$1mnExplore KAM

$2.5mnInstall KAM

$5mnEmbed KAM

Larry Greiner, “Evolution and revolution as organizations grow”, Harvard Business Review August 1972Adapted by Andre Pellet for ALC Miami 2010.

Growth of Sales TeamsPlanning for future developments

Mixture of Sales people and Key Account Managers

To Conclude

If you are setting up a sales team they need to be fed leads and managed/measured continuously. Procrastination is the enemy of sales. CRM software lets you manage more people but isn’t the answer to everything, CRM is based on 3 principles (marketing, strategy and IT) and all 3 need to be addressed.

You will increase profits by managing relationships and not simply selling stuff. Retain clients AND develop relationships (up the ladder) – locked in clients will become hostages/terrorists. Look for monopolies and try to kill them (because the service will be terrible).

Purposely build strong multi-departmental relationships with your customers to decrease the likelihood of loosing an account on loosing an employee.

Measure/value clients on their lifetime value and not a series of one off payments.

Look to add strategic clients which will/can progress up the ladder of loyalty – some people are switchers and will always be.

Its common sense to you (as entrepreneurs) but may not be to your staff…

Contact Details

For a copy of the slides emailRichard.Brooks@k-international.com

@RichardMBrooksuse the conference hashtag #ALC11

Key Customer PortfolioHow to pick your key accounts.

Strength with Customer (relative to best competitor)

High Low

Key

Acc

ou

nt

Att

ract

iven

ess

Low

Hig

h

X axisStrength with Customer SizeGrowthSharePositionProfitBrandPeople

Y axisKey Account AttractivenessSizeMarket GrowthPricingStrategic partnershipStrategic Opportunity

Strategic Investment

Pro-active Maintenance

Manage for Cash

Selective Investment