Managing Director & Partner
Every successful business understands the critical importance of effective selling. Too often, however, sales force effectiveness decreases over time. The reasons are varied. Bad habits take hold, paperwork gets in the way of face time with customers, incentives become misaligned with objectives, managers don’t spend enough time coaching in the field, or sales reps focus more on products than on customer needs. In other cases, the sales force loses sight of which accounts are actually generating a profit once sales costs and support are factored in. As a result, most companies are leaving money on the table and growing more slowly than they could. Some are even losing money on high-touch customer accounts.
By rethinking the most important aspects of the sales process and pulling the right levers, managers can make even high-performing sales forces more productive—and increase the revenue and profits of the business by 10 to 15 percent.
We measure sales-force effectiveness (SFE) by looking at the gross profit per sale, after subtracting all selling costs. In our opinion, a customer-centric approach and a focus on achieving business objectives are critical to success. While we recognize that direct B2B selling is occurring more and more in a multichannel environment, the traditional sales force is still a very effective way to generate demand.
Every company will have a different starting point and a different end goal when it comes to increasing sales force effectiveness. Some businesses will seek to continually refresh their sales capabilities; others will aim for a longer-term transformation. The key is to understand where the critical areas for improvement are by diagnosing all aspects of selling and support—and targeting those with the biggest upside potential.
Opportunities for improvement and transformation lie in each of the five key components of selling: targeting, deploying, executing, engaging, and enabling. As shown in the exhibit, each of these areas has specific improvement levers, all of which are interconnected. Some companies choose to tackle many levers at once for a broad-based transformation of the sales force, while others achieve meaningful results by first focusing on a subset of levers and then addressing others over time. An initial analysis and diagnostic can identify the areas with the greatest improvement potential. Moreover, we’ve quantified the results that each lever delivers, on the basis of our experience with a wide range of companies.
Let’s examine each component of sales and its improvement levers more closely.
Because every situation is different, the right solution—and the bottom-line impact delivered—will depend on your company’s starting point, industry, and competitive position.
Many companies, even those with world-class sales forces, realize that they have a problem when revenue growth slows—despite significant increases in sales resources. The telltale signs may include lower sales levels, complaints from top customers that they rarely hear from their account managers, new entrants gaining market share, or the departure of top sales reps.
An end-to-end analysis of the five areas outlined above typically reveals a range of problems with targeting, deployment, engagement, and execution. For example, sales reps may be focusing more on large but slow-growing customers than on accounts with low penetration and high potential. Or there may be little correlation between the size of an account and the number of sales reps assigned to it full time. Often, sales territories are too large, unwieldy, and unfocused to cover in a meaningful way. As a result, potential customers are underserved, and sales reps—because they don’t contact accounts more often—lose out on opportunities to explore customer needs and provide information on products that could meet those needs.
The solution could be to move from a product-centric to a customer-centric organization and improve global teamwork. By shifting resources to the highest-value areas and bringing in teams of functional and industry experts, companies can better address customers’ specific needs. Smaller territories and greater focus can help, too. Sales reps with more manageable territories—whether because they have fewer accounts or have been assigned to a targeted geographic area—can invest more time in building customer relationships. In our experience, this approach delivers sharp improvements in sales performance metrics. Typically, revenue and quota attainment increase by 20 percent or more, and sales productivity improves by double-digit percentage points.
The same principles can be tailored to larger, more transformational efforts. For instance, we worked with a major pharmaceutical company that was about to launch three new products but had a costly selling model and a limited budget with which to increase the sales force. Because of these constraints, the company had to sharply improve the efficiency and productivity of its existing sales reps. The solution was a multiyear transformation that addressed many SFE levers, with a special focus on the enablement area and providing better support to the sales reps.
An initial diagnosis revealed that the first-line sales managers and the length of time they’d been on the job were the biggest factors driving sales performance—not the sales reps themselves. These experienced managers knew their regions and territories, their customers, and the strengths of their reps far better than their less experienced peers, and they were able to coach and manage more effectively. The less experienced managers spent less time in the field with the sales force, less time on calls, and less time coaching sales reps.
Given this insight, a key part of the SFE program was to develop a training program for these front-line supervisors. After testing and refining the program around the world, the company set up a global academy with international training centers to increase the overall discipline, standardization, and professionalism of the sales process and sales force. Account management and performance management are now important parts of selling. All members of the sales force have tools to monitor how accounts are doing, view market share, and manage their territories. Reps and their sales managers are given clear KPIs that measure the quantitative aspects of performance, such as activity levels and results, as well as qualitative factors such as call quality for reps and coaching effectiveness for line managers.
The impact of the transformation was significant. Sales activity grew by more than 30 percent with no additional hiring, while revenue and market share for three important brands increased substantially—by 10 percent on average in one key country. Driving these results were significant improvements in sales force activity. Calls per sales rep jumped by more than 25 percent, compliance with plan grew by 30 percent, and sales managers increased their coaching time by 55 percent.
Choosing which levers to focus on is just the beginning. A good next step is to review the key lessons we’ve distilled from our work and experience. As noted below, it’s a good idea to start with focused, visible efforts. Be sure to carefully sequence the initiatives and create an improvement agenda with a manageable number of levers to start with. A few quick wins can build enthusiasm and momentum—and won’t overwhelm the sales function.
Based on our work with leading companies in a wide range of industries, we’ve distilled a number of key insights for improving SFE:
The key is to think big but start with focused, visible efforts. Look at the global picture while systematically reviewing the end-to-end sales process. An analysis and rapid diagnostic will reveal the biggest improvement opportunities—and the levers that will have the greatest impact.
As with any major improvement effort, an SFE program is an exercise in change management and behavioral adaptation that must be driven by business executives and line management—not just sales leaders. Major change starts with a clear understanding of why an improvement in the sales force is necessary and what lies at the end of the road. This clarity must come from top executives and be communicated to all levels of the organization. It is also critical to have agreement among business and sales executives on the goals of the SFE program and how to achieve them.
Even with a clear vision and executive alignment, SFE success will be elusive without rigorous program management that includes clear milestones and accountabilities, effective project teams, and strong stakeholder engagement. Without a high degree of executive commitment and oversight, high-potential initiatives often become watered down or programs lose momentum.
Sales force effectiveness is a key driver of revenue growth, which in turn drives a company’s shareholder value. In fact, BCG research shows that revenue growth is the single most important driver of long-term value creation. By following our SFE approach, even world-class sales organizations can grow revenue, cut costs, increase margins, and boost their overall effectiveness.