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Monitor Sales Force Effectiveness

Monitor Sales Force Effectiveness



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Published by: quizzy226 on Jun 20, 2008
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Handbook ofBusiness Strategy
Why ``sales force effectiveness'' isn't
Mary Larson and Romney Resney
Why ``sales force effectiveness'' isn't
Mary Larson and Romney Resney
Mary Larson (mary_larson@monitor.com)and Romney Resney(Romney_resney@monitor.com) are Global Account Managers with Market2Customer(M2C), the Monitor Group's strategicmarketing practice.
 This article explodes some commonmyths about what sales forceeffectiveness really means.Is there a management team that
been seduced by the revenue-boosting,cost-slashing mantra ``sales force effectiveness''? The phrase, used broadly toencompass both a wide range of sales force automation and related CRM (customerrelations management) initiatives, as well as revamped sales-force training andincentive systems, activity audits, customer satisfaction surveys, and personnelreshuf¯ings, has triggered massive amounts of corporate spending in recent years ±nearly $12 billion on CRM applications alone in 2002, according to ForresterResearch, a ®gure that Forrester projects will almost double in the next ®ve years.Unfortunately, many companies have less to show for their investments than theypredicted or hoped for. Time and time again, clients come to us wondering why off-the-shelf or consultant-directed sales force effectiveness solutions have failed to liveup to their power-point hype. Surveys bear this out: according to Gartner, 55 percentof CRMinvestments have notachieved their expected results. Forrester reports thatamere 8 percent of decision makers at large companies proclaim themselves ``verysatis®ed'' with their CRM results. And a survey by AMR Research shows that only 16percent of companies implementing CRM believe it measurably improved theirbusiness performance.Clearly, much of what comes under the umbrella of ``sales force effectiveness'' is notvery effective.
What's the problem?
 Traditional approaches to sales force effectiveness usually fall into one or more of fourcommon traps:1
The technology trap
. Efforts to improve sales productivity often focus ontechnology implementation. The rationale, often promoted by technologyconsultants and vendors: ``Now that we've implemented a global CRMsolution, let's layer on an SFA (sales force automation) module so that we candeliver the results we promised.'' Yet expensive sales automation systems thatpromise to achieve higher sales and leaner staffs too often deliver far less:unchanged sales with a higher cost base, plus lots of information that no oneknows what to do with. By focusing on systems instead of strategy, companiesoverlook the crucial big-picture questions: will the new tools translate intoincreased revenues, and ifso, how? Thosequestions canonly be answered whencompanies begin to look at technology not as an end in itself, but as a tool that
2004, pp. 233-237,
MCB UP Limited, ISSN 0894-4318, DOI 10.1108/10775730410494170 PAGE 233
can potentially be used to in¯uence (directly or indirectly) itscustomers' buying habits and loyalty.2
The focus on tactics trap
. Another common ¯aw in salesforce effectiveness efforts: working to optimize salesprocesses and incentive systems without cementing theoptimal underlying customer strategy. As one manager for aleading technology-services company noted in a recentmeeting: ``In the past ®ve years, we have had two major re-orgs and tried every sales training program. We have beenrunning as fast as we can. But we are still standing in thesame place ± in line, behind our competition.'' In focusingon realignment of clients' sales forces and incentivestructures, traditional sales organizational consulting ®rmsoften take the customer strategy and approach to marketas a given. But sales support systems such ascompensation and training can't be de®ned, much lessimplemented, until a company understands what itscustomers want, how they buy and what will get them tobuy more. Only when a ®rm has de®ned its optimalcustomer-leverage points can it proceed to design salesprocesses that will mesh with them. If an organization doesnot align its overall strategy with the customer behaviors it istrying to in¯uence, then even the best tactics, supported bystate-of-the-art systems and organizational design, will fail.3
The ef®ciency trap
. It's not surprising that in these cost-pressured times, many companies strive for ef®ciency gainsand headcount reduction by embarking on a detailed auditof sales-force activities and, from there, determining whatactivities, and therefore headcount, can be cut. Moreenlightened ®rms hope that the end result will be a salesforce that spends more time selling, and less time boggeddown in administrative tasks. Though this is an importantand useful step, it falls well short of de®ning what preciselythe sales force should be doing in that expanded ``sellingtime''. In this age of consultative solution-selling, whensales reps are increasingly expected to act as trustedstrategic advisors to the c-level suite, sales executivesinform us that their toughest challenge isn't ®nding the timeto meet clients, but rather getting the right meeting ± andknowing what to say and do in that meeting to close thesale. ``Doing more of the same has limits,'' one consumer-durables executive told us. ``At a certain point we have toreinvent our overall approach.'' In other words, makingthose selling activities more productive. And that meansfocusing the time on the right leverage points with the rightcustomers.4
The marketing/sales-divide trap
. Organizations oftenspend huge sums of money developing their marketingstrategy ± segmenting their customers, developingmarketing materials and messaging, and so on.However, this process often takes place within thedepths of the marketing department, and remainsdisconnected from the on-the-ground reality of the salesforce. In trying to develop a big-picture understanding of their customers, marketers often come up with elaborate``needs-based'' segmentation schemes (bearing cutepsychographic names like ``Trendy Technology Lovers'',``Workaholic Overachievers'', etc.) and develop marketingmaterials based on those segments. In the meantime, thesales force is simply handed the completed marketingstrategy, rather than being consulted on it as it is beingdeveloped. This ``throw it over the fence'' approachincreases the likelihood that the sales force will view themarketing plan as an academic exercise that has littlerelevance to the day-to-day reality of ®nding and selling tocustomers. And with little faith or investment in themarketing plan, sales people naturally end up defaultingto simple but far more actionable segmentation schemes(often size ± and geography ± based) and the tried and trueselling tools and messages that they have used before andare comfortable with. The inevitable end result is not marketing's hoped-forintegrated customer strategy, but reactive, ad hoc salesprograms based on discounting or one-off promotions. This process is all too common in our experience. Forinstance, one recent client, a category-leading paper-goods manufacturer, had recently overhauled its marketingorganization to better align it with consumer needs. As partof this effort, the marketing organization had developed achannel-programs group to translate its materials for thesales organization. But the sales organization found thosematerials to be completely out of sync with what theyneeded to serve their customers. In the end, despite themarketing organization's considerable investment inunderstanding consumers and needs, the sales repswound up developing their own promotions for retailers.
What's the solution?
 There is a way to truly improve sales force effectiveness ± tobridge the marketing and sales chasm, energize the salesforce, and drive pro®table top-line growth. How? By putting thesales organization's energy to use where it will make thegreatest difference in getting customers to buy more, moreoften. Here are three steps toward making that happen:
Only when a ®rm has de®ned itsoptimal customer-leverage pointscan it proceed to design salesprocesses that will mesh withthem.
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