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How do you measure your sales force?

From a physicist’s point of view, a force is any influence that causes an object to undergo a certain change. So, how effective is your sales force in influencing prospects so that they become loyal customers?

Many companies have sale forces. Some companies use them properly. A sales force is a terrible thing to waste.

Do you know your close ratio? Is it all you expected?

In the case of medium or smallish operations, the sales force has probably evolved from an ancestor that doesn’t necessarily resemble or preordain its contemporary descendant. Think of dinosaurs and birds. Who could have known…

So maybe the founder acted as sales rep as well as sales manager and everything else. Perhaps one of the original partners had an inclination towards sales and adopted the role. It is conceivable that some junior person was actually hired to run after sales (and I use the phrase literally). A sale would be made and then somebody had to run after the details. In any case, companies grow and then maybe somebody else is brought on board and before you know it the top sales person has been named sales manager and, if you are lucky, sales meetings happen. This, believe it or not, is not the way to set up and run a sales force.

It doesn’t matter how it started. People running businesses make decisions and often have to make do with whatever or whoever is at hand at the time. If you are successful, i.e. you are making more than you are spending and are experiencing more sales that you were this time last year, you are probably doing something right. Rule no. 1: Don’t take it for granted. There are so many reasons that may be the root cause of your success; you are a business genius, your competitors are useless, the customers you gained, liked you more as a person, the customers you gained were seriously peed off by the other guys, sheer chance… the list goes on. If you can not face your mother and without a hint of a blush tell her that you are the reason for your success, than you are well on the way to achieving your goals. If you are not 100% sure, substitute the ego trip with some good old-fashioned analysis and lots of time face to face with your sales people and customers.

Your sales force should be as big as it needs to be. Not bigger, not smaller. You need to determine the type and size of your sales force. What is the size of the market you are targeting? What sort of share do you realistically expect to gain and by when? Where are your customers located? How do you serve them? How many sales people do you need to create break – even sales?

Everything becomes easier if you spend some quality time learning about structured sales. This is where you stop leaving things to luck and “talent” and start building a sales infrastructure that supports a sales force that knows its targets, gets measured against them and delivers on them.

What you need to look at:

  1. Sales force structure
    1. How many sales people?
    2. Who looks after which customer?
    3. What are my sales channels? Key accounts? Telesales?
    4. What skills do my sales people need?
    5. What type of sales persons do I need?
    6. What type of sales organization do I need?
  2. Sales force infrastructure
    1. How do I support my sales force so that most of its time is spent face to face with customers?
    2. How do I manage the sales pipeline? (do we know what it is?)
    3. What software do I use?
  3. Sales force performance
    1. How do I measure sales force effectiveness and efficiency?
    2. How do I make the sales force passionate about achieving targets on all KPIs?
    3. What are the KPIs?

When sitting down to tackle this crucial subject, always keep in mind what is driving your business. What is that single crucial KPI that threatens to give you an ulcer if it isn’t where it should be and makes you want to kiss people in the office when it is? Then communicate to the sales force what is expected of them and get them to go about achieving it.

 
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Posted by on 03/09/2012 in Managing sales

 

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Forecasting – wishful thinking or solid projection?

Never take growth for granted

It never ceases to amaze me how the simple basics of business get buried under the basic business of… business. OK, running a medium or even small operation is taxing and demands on the owner/manager or resource-starved manager are increasing month on month in this environment of “more with less”. Having said this, would you go ahead and order the catering before you know how many wedding guest there will be? Surprisingly enough many, otherwise competent, managers fall into the trap of running around after the day-to-day and letting the important stuff like planning and forecasting become permanently assigned to the back-burner. Some people like to give the impression of always being on the move, always being active. Chickens, given the appropriate yard space can run circles around any athlete. They are extremely active and energetic. But are they very productive or efficient?

Are you buying into the self projected myth that you are too busy? Too busy to see if you are going to have enough revenue and profit this (or next year) to pay your suppliers and staff?

Any manager worth his or her salary should spend a considerable amount of their time on the numbers. Depending on the time frame of delivery of your offering you should have your forecast and check your actuals against it daily, weekly, monthly etc. Then if you see that the actual is deviating from the forecast you put into action the what-if scenaria which, of course have already been prepared. This process is especially relevant in the current economic reality.

Everybody has their own way of forecasting. There is an unlimited supply of relevant articles and publications. Do spend some time looking into this. There are also tools available that can make the non statistical manager’s life easier. BUT, don’t rely only on the math.

I have seen too many managers take a ball park approach along the lines of “Well, we need to grow around 5%”. Then they turn to the sales director and issue a directive in managerial macho-speak, “Make it happen, Jim”. The problem is compounded if Jim answers in the same lingo, “I’m on it, John”.

There are three components that make for a sound forecasting exercise:

First you need the mathematical bit. This is where you look at historical data and project into the required period (next year, next semester, next quarter whatever).

You can be very detailed and use complex tools or you can use a spreadsheet and somebody who knows how to work it. It depends on what you have available. In a rapidly changing environment, I find that trying to be accurate down to the finest detail is a waste of time. It’s like spending six hours drawing a chalk street-art masterpiece on the sidewalk next to a big puddle.

The second component is the intuitive bit. This is where you look at where the numbers are coming from. Never take anything for granted, especially growth. Remember, the more historical data you have (let’s say three or four years as anything logged before Lehman is probably irrelevant to the reports you are getting today) the easier it is to identify patterns and flukes. If there are flukes (outliers or outright liars) kill them. Disregard them. Unless you can repeat them (that once-off big deal with the ministry or whatever). Do spend some time looking at your ad hoc business. It’s pretty safe to assume that if your sales force is bringing in a relatively constant level of said, one could assume that they will continue to do so. Report ad hoc gains separately and spend some time on them. Some repeat cases simply have a smaller frequency (a company that uses you once every twenty months?).  Segment your customer base by industry, at least. What is going on in their industries? Are they beating the market or following suit? What lies ahead for their industry? Good old PEST analysis. Changes in legislation? Liberalisation? Elections? Change of Administration? War? What countries do they trade with? Then go and look at each customer individually. If you have a sales force, they should sit with you and discuss the validity of the mathematical validity of the forecast in relation to their clients. Then you can factor in the real life input and adjust upwards or downwards.

The third and most important component (possibly the least documented in regression analysis white papers) is realism and the ability to face brutal facts and take, if necessary, brutal steps. Once you taken the pain to arrive at a sound forecast, it is totally useless if you refuse to take into account what it is showing you. If it looks good, fine. Just don’t let the sales force get smug. If it looks bad, then you must make decisions. Is boosting the sales commissions and taking a firmer hand to the sales people enough to bridge the gap? If not, how serious is the short falling? If it is such that it makes your lower intestine feel uncomfortable (sort of a gut feeling) then you need to take a serious look at the other contributor to your profit: cost. But that’s another story.

 

 
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Posted by on 29/08/2012 in Managing numbers

 

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