Handbook of

Business 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 strategic
marketing practice.
This article explodes some common
myths about what sales force
effectiveness really means.
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HANDBOOK OF BUSINESS STRATEGY 2004, pp. 233-237, # MCB UP Limited, ISSN 0894-4318, DOI 10.1108/10775730410494170
Is there a management team that hasn't been seduced by the revenue-boosting,
cost-slashing mantra ``sales force effectiveness''? The phrase, used broadly to
encompass both a wide range of sales force automation and related CRM (customer
relations management) initiatives, as well as revamped sales-force training and
incentive systems, activity audits, customer satisfaction surveys, and personnel
reshuf¯ings, has triggered massive amounts of corporate spending in recent years ±
nearly $12 billion on CRM applications alone in 2002, according to Forrester
Research, a ®gure that Forrester projects will almost double in the next ®ve years.
Unfortunately, many companies have less to show for their investments than they
predicted 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 live
up to their power-point hype. Surveys bear this out: according to Gartner, 55 percent
of CRM investments have not achieved their expected results. Forrester reports that a
mere 8 percent of decision makers at large companies proclaim themselves ``very
satis®ed'' with their CRM results. And a survey by AMR Research shows that only 16
percent of companies implementing CRM believe it measurably improved their
business performance.
Clearly, much of what comes under the umbrella of ``sales force effectiveness'' is not
very effective.
What's the problem?
Traditional approaches to sales force effectiveness usually fall into one or more of four
common traps:
1 The technology trap. Efforts to improve sales productivity often focus on
technology implementation. The rationale, often promoted by technology
consultants and vendors: ``Now that we've implemented a global CRM
solution, let's layer on an SFA (sales force automation) module so that we can
deliver the results we promised.'' Yet expensive sales automation systems that
promise 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 one
knows what to do with. By focusing on systems instead of strategy, companies
overlook the crucial big-picture questions: will the new tools translate into
increased revenues, and if so, how? Those questions can only be answered when
companies begin to look at technology not as an end in itself, but as a tool that
PAGE 233
 can potentially be used to in¯uence (directly or indirectly) its
customers' buying habits and loyalty.
2 The focus on tactics trap. Another common ¯aw in sales
force effectiveness efforts: working to optimize sales
processes and incentive systems without cementing the
optimal underlying customer strategy. As one manager for a
leading technology-services company noted in a recent
meeting: ``In the past ®ve years, we have had two major re-
orgs and tried every sales training program. We have been
running as fast as we can. But we are still standing in the
same place ± in line, behind our competition.'' In focusing
on realignment of clients' sales forces and incentive
structures, traditional sales organizational consulting ®rms
often take the customer strategy and approach to market
as a given. But sales support systems such as
compensation and training can't be de®ned, much less
implemented, until a company understands what its
customers want, how they buy and what will get them to
buy more. Only when a ®rm has de®ned its optimal
customer-leverage points can it proceed to design sales
processes that will mesh with them. If an organization does
not align its overall strategy with the customer behaviors it is
trying to in¯uence, then even the best tactics, supported by
state-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 gains
and headcount reduction by embarking on a detailed audit
of sales-force activities and, from there, determining what
activities, and therefore headcount, can be cut. More
enlightened ®rms hope that the end result will be a sales
force that spends more time selling, and less time bogged
down in administrative tasks. Though this is an important
and useful step, it falls well short of de®ning what precisely
the sales force should be doing in that expanded ``selling
time''. In this age of consultative solution-selling, when
sales reps are increasingly expected to act as trusted
strategic advisors to the c-level suite, sales executives
inform us that their toughest challenge isn't ®nding the time
to meet clients, but rather getting the right meeting ± and
knowing what to say and do in that meeting to close the
sale. ``Doing more of the same has limits,'' one consumer-
durables executive told us. ``At a certain point we have to
reinvent our overall approach.'' In other words, making
those selling activities more productive. And that means
focusing the time on the right leverage points with the right
customers.
4 The marketing/sales-divide trap. Organizations often
spend huge sums of money developing their marketing
strategy ± segmenting their customers, developing
marketing materials and messaging, and so on.
However, this process often takes place within the
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`` Only when a ®rm has de®ned its
optimal customer-leverage points
can it proceed to design sales
processes that will mesh with
them.
''
depths of the marketing department, and remains
disconnected from the on-the-ground reality of the sales
force. In trying to develop a big-picture understanding of
their customers, marketers often come up with elaborate
``needs-based'' segmentation schemes (bearing cute
psychographic names like ``Trendy Technology Lovers'',
``Workaholic Overachievers'', etc.) and develop marketing
materials based on those segments. In the meantime, the
sales force is simply handed the completed marketing
strategy, rather than being consulted on it as it is being
developed. This ``throw it over the fence'' approach
increases the likelihood that the sales force will view the
marketing plan as an academic exercise that has little
relevance to the day-to-day reality of ®nding and selling to
customers. And with little faith or investment in the
marketing plan, sales people naturally end up defaulting
to simple but far more actionable segmentation schemes
(often size ± and geography ± based) and the tried and true
selling tools and messages that they have used before and
are comfortable with.
The inevitable end result is not marketing's hoped-for
integrated customer strategy, but reactive, ad hoc sales
programs based on discounting or one-off promotions.
This process is all too common in our experience. For
instance, one recent client, a category-leading paper-
goods manufacturer, had recently overhauled its marketing
organization to better align it with consumer needs. As part
of this effort, the marketing organization had developed a
channel-programs group to translate its materials for the
sales organization. But the sales organization found those
materials to be completely out of sync with what they
needed to serve their customers. In the end, despite the
marketing organization's considerable investment in
understanding consumers and needs, the sales reps
wound up developing their own promotions for retailers.
What's the solution?
There is a way to truly improve sales force effectiveness ± to
bridge the marketing and sales chasm, energize the sales
force, and drive pro®table top-line growth. How? By putting the
sales organization's energy to use where it will make the
greatest difference in getting customers to buy more, more
often. Here are three steps toward making that happen:
Step 1. Understand your customers: how they buy, and
where there is leverage to change their behavior
At its core, increasing revenue depends on understanding
exactly how your customers buy and what you can do to get
them to spend more ± in other words, to buy more often and/or
to pay more than they are paying today.
Each step in the buying process offers different leverage points
for the sales force to achieve this objective. By systematically
diagnosing current customer behaviors and their frequency,
companies learn how purchase decisions are made, who gets
involved, and what matters (and what doesn't) for different
customer groups (see Figure 1). Identifying those groups' paths
through the buying process enables ®rms to predict the
potential value of changing any particular customer behavior.
Armed with this knowledge, a company can target the
behaviors that have the best chance of leading to increased
purchases and usage.
An example: a ®nancial-services client was focused on
developing sophisticated scenario-planning tools for its
®nancial planners to use to persuade potential customers to
choose its family of mutual funds over the competition's.
However, further analysis revealed that most potential
customers' key question was not which brand to buy, but
whether to buy at all. By retargeting its ®nancial planners'
efforts earlier in the buying process ± in other words, by helping
Figure 1
potential clients to overcome their inertia and general
investment fears ± the company was able to grow its new-
customer acquisition rate by 27 percent in less than a year.
Step 2. Align sales activities to deploy the power of the
direct-sales organization where it will matter most
Next, companies must align their resources to their overall
strategy in order to design the best sales strategy to get their
customers to buy more, and more often. To do so, they must
determine which sales interactions will create the desired
behavioral changes within the target customer groups, then
reorganize their sales activities around these key interactions.
The result is an aligned, integrated set of activities across ®ve
areas:
1 Identifying target customers and actions likely to yield the
greatest return for speci®c behavioral objectives (segment
accounts).
2 Optimizing the sales-coverage model (who ``visits'', how
often, etc.) for target customers through aligning the overall
business-planning and customer-account planning
process with the segmentation developed.
3 Accessing target customers' decision-makers (getting the
right visit) by understanding buyer and in¯uencer dynamics
within an organization. This is fundamental to most complex
or high-value sales environments.
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HANDBOOK OF BUSINESS STRATEGY 2004 PAGE 235
4 Designing the optimal sales interaction (what sales people
say and do) for each customer type.
5 Managing the customer relationship beyond the visit (what
is done between visits across all touch points and
channels). Retaining and maintaining the customer
throughout the sales cycle and relationship with the client
is critical.
Step 3. Ensure that the necessary skills, capabilities and
systems are in place ± and make explicit choices about what
not to do
When the proper strategy and sales processes are ®rmly in
place, it is time to develop the supporting systems needed to
implement them. There are four key elements to the process:
First, a ®rm must develop targeted sales/marketing materials by
assessing the ability of existing collateral to drive behavioral
objectives, then recommending new materials to ®ll the gaps in
sales-strategy and interaction-mix support.
The second and perhaps most crucial element is the creation of
compensation programs which align incentives squarely with
the changes in customer behavior that the ®rm is seeking to
drive. (This must be accomplished while keeping an eye on
nearer-term sales goals.)
The third element is building the requisite sales-and-account-
management capabilities and skills base. We have argued that
strategy is key ± but we also know that even the best strategy
absent a sales force that can implement it is close to worthless.
Finally, a company must cut, reallocate, or outsource any and
all activities that do not support its customer strategy.
In summary
Contrary to popular wisdom, the core elements of today's sales
effectiveness initiatives ± changes to a sales organization's
technology infrastructure, compensation system and
organizational structure ± are not the ®rst things companies
that want to boost their revenues should be considering, but
the last. Instead, ®rms must begin at the beginning, by aligning
their sales activities with the speci®c customer behaviors they
aspire to alter or reinforce. That's the key to real effectiveness ±
and long-term success.
Effective sales force effectiveness ± a client case
study
After a period of intense cost cutting, one of the top three
players in the worldwide beer market approached us to help it
drive organic revenue growth by expanding its market share
and customer base. The company had already identi®ed a
signi®cant opportunity for such growth: pubs and restaurants,
or the so-called ``away from home'' (point of sale ± POS)
segment. But it was stymied in its efforts by the powerful role of
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PAGE 236 HANDBOOK OF BUSINESS STRATEGY 2004
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`` Sales support systems can't be
de®ned, much less implemented,
until a company understands what
its customers want, how they buy
and what will get them to buy
more.
''
independent wholesalers in driving the purchase behavior of
POS owners and managers. Because its sales force had
traditionally been focused mainly on relationships with
distributors, it had very little contact with and in¯uence over
POS owners. The company needed to rapidly develop a
practical road map for reorganization of its sales processes,
roles and incentives to support the new focus on the POS
sector. And it had to do it in a way that would be palatable to its
distributors.
Our ®rst task was to understand the buying process for each
POS customer ± the types of consumers (and occasions) that
each POS customer segment served ± since that would drive
not only what kind of beer each POS customer bought, but also
how each customer thought about, and ultimately purchased,
the product. Once we mapped the buying process, we
highlighted speci®c leverage points within it where our client
could intervene with ``activation levers'' ± messages,
promotions, brands, product formats and other non-price-
based propositions ± that would positively impact on purchase
behavior. This process enabled us to develop very granular
activation plans for each target POS segment.
An illustration of a key leverage point for one POS segment ±
pizzeria owners ± and the resulting activation levers is shown in
Figure 2.
We then used the key leverage points to construct an aligned
sales and marketing strategy. We knew that pizzeria owners
care a great deal about both selling beer with meals and meals-
oriented promotions. We also knew that they tend to frequently
switch their core ``on-tap'' vendors based on price incentives,
but that our client could retain them much of the time if it
promised to service the on-tap lines better than its competitors.
Finally, our client needed to ``educate'' the POS owner that his
overall meal margins are higher when diners order beer with
their pizza rather than a soft drink ± and higher still when that
beer is one of our client's premium-branded products.
Next, we translated these strategies into a set of tactical
initiatives for the sales organization. We de®ned the frequency
of calls, determined which calls should be made with the
distributor; reconstructed the ``messages'' that sales people
Figure 2
would deliver (including education around restaurant
economics), and speci®ed the role that promotions managers
would play with the segment.
Finally, we developed a comprehensive new sales and sales-
support con®guration to execute the revamped strategy. This
encompassed ``selling'' the idea to the distributors,
organization design, process rede®nition, revised roles
(including the roles of the promotions managers and
customer service), sales training, and performance metrics
and incentives. We also designed the architecture for a
comprehensive SFA capability that would mesh with the
parent company's overall CRM plans.
The program, a true collaboration between us and the client,
was rolled out rapidly, and it worked: the client achieved targets
of 36 percent volume growth in targeted segments and
doubled its organic revenue growth overall. It succeeded
because every level of the company that ``touches'' the
customer ± from the COO, to marketing, sales, customer
service, promotions, billing and even IS ± had been involved in
the planning from the start, because the customer had also
been ``brought into the story'' early via a series of well-
orchestrated trade meetings. And also because we had
considered the implications of the shift for the independent
distributors early on, which enabled us to ensure that both the
client and distributors ``won''. J
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HANDBOOK OF BUSINESS STRATEGY 2004 PAGE 237
Reprinted from
Handbook of Business Strategy, Vol. 5 No. 1, 2004,
# MCB UP Limited, 0894-4318 www.emeraldinsight.com/reprints