Boosting Sales Productivity - Sales Management

Sales Management is the central and core link in the value chain (see my earlier post "Boosting Sales Productivity").  Here, market needs are matched to the company’s solutions and applied to individual customers.  The first step is territory allocation and quota setting, followed by account planning and opportunity management.

Effective sales management results in salespeople in high performing companies spending up to 64% more time selling than their counterparts in low performing companies, and overall sales productivity that is 37% higher!

The salient features of high performing sales organisations relate to the sales managers themselves, their salespeople and the engagement model of the company.

Sales Managers:

• Are involved in the systematic and formal recruitment and induction of their sales people
• Coach and mentor sales people
• Are committed to maintaining the competency of their salespeople 

Sales people:

• Spend much more time with customers than inside their own organisation
• Act professionally at all times 
• Are disciplined in their use of the company's sale methodology and supporting CRM/SFA tool

Engagement model features:

• Strong teamwork across sales and with the rest of the company 
• Customer involvement in account and opportunity planning
• Bid management and forecasting processes that are formal and effective, but also easy to use 
• Partnering that is mutually rewarding

Next post: Strategic Management (the foundation of success!)

"A More Prosperous Australia"

The AICD puts its view on regulation

The Australian Institute of CompanyDirectors (AICD) has issued a new policy paper (“Governing for a more prosperous Australia”) that puts forward to the next government of Australia the key issues for directors, including a “new approach to regulation and better consultation with business”.
It defines three “critical components of reform”:

1. Review and reform existing regulation
2. Review and reform the process of regulation
3. Improve the interaction of business and government

Its first key recommendation is that

non-regulatory solutions should be the default mode

when addressing public policy issues and that any regulation should include “offset savings” for business whilst requiring that the public service undertake a range of additional activities when drafting regulations and that the government should slash existing regulations.

The purpose is to allow directors to spend more time on “strategy and entrepreneurship”, and allow them to do their “real job” of improving company performance, while not being hindered in generating wealth. This altruistic plea from the heart has only the country in mind as red tape slows “the engines of growth and job creation” and “stifles wealth creation in the economy”.

Has the AICD focused on the real issue?

One assumption of the company directors' view is that, in the absence of interfering regulation, their companies are models of efficiency, with all of them centres of excellence in what they do. The truth, of course, is much less laudatory.  I've written of this in my Leadership blog and my company blog.

One cannot, however, disagree with the proposition that regulation saps productivity. But then its aim is not the efficiency of a firm but its behaviour. Firm-level efficiency is a matter for the directors and managers; industry-level efficiency is a matter for the key players in the industry; and national efficiency does involve governments.
By the nature of bureaucracy, any regulation will to an extent be inefficient and ineffective and so should be avoided. However, as with most business organisations, the AICD wants government to take a new approach to regulation, not its members.

Good managers (and directors) address the root cause not the symptoms

The AICD's proposal is faulty in two key regards. Firstly, it assumes that regulation occurs in a vacuum when it is in fact reactionary. Regulation arises from a view in the community that an organisation (commercial, sporting, religious or whatever) is misbehaving. Governments respond by regulating the miscreants (and their peers).

Secondly, the AICD conflates national wealth with company profitability. National wealth takes into account the cost of business externalties such as pollution, employee harm and community dislocation. Company directors and managers do all they can to externalise their costs as this is the easy way of increasing profitability. They will be handsomely rewarded if they can convince governments to take responsibility for cleaning up rivers, rehabilitating injured workers, training workers, assisting communities when their major employer packs up and goes elsewhere, and so forth.

The AICD's approach does not get to the root cause of regulation – the misbehaviour of their companies. They demand reduced regulation but operate at the limits of existing regulation – an “if its legal, we can do it” attitude – and then decry the predictable response of the public and government. Think of the tobacco companies, asbestos companies and the shale gas mining companies.

The "once and for all" way to end regulation

The way for directors to avoid regulation is to consider all the effects of their decisions; to understand that a corporation is an entity whose existence is licensed by the community in which it operates; and to understand that shareholders are but one of a number of stakeholders with an investment in the productive and ethical operation of the corporation.

If directors wish to avoid regulation they should, like any social entity, behave.

Boosting Sales Productivity

Over the past several years I've discussed improving sales productivity with many senior executives of many Australian and international IT product and services companies.  This has led to the development of an assessment tool for obtaining quantitative insight into the drivers of productivity.

In the series of blog posts to follow, I'll highlight the key findings of this research in the hope that readers may apply some of the 'best practices' I've identified.

The blogs will be structured to reflect the BusinesSPM Value Chain Model shown here.

The chain creates value for the customer and this is rewarded with revenue (from the effectiveness of the value chain) and profit (from the efficiency of the value chain) for the company.  Improving the value chain leads to increased revenue and profit.
The value creating links are those in the central stream, from strategy through to the relationship with the customer.  The lower stream encompasses the functions that support the value creating activities.  The upper stream activities manage the value chain.

The model highlights the central role of the sales function, but also that successful selling depends on the “upstream” functions.  And it shows that the sales function establishes the basis for “downstream” success.  The interaction between company and customer has many iterations of value creation during the course of the relationship, and the importance of the “downstream” activities to up-sell and cross-sell is thus apparent.

Each value-creating link is served by its predecessor and serves its successor.  Underperformance by one link detracts from the performance of the next and is magnified down the chain.  For example, if each of the links is operating at 90% productivity, the whole value-creating stream operates at a debilitating 48% overall productivity (0.9 times 0.9 times …)!

The importance of the supporting functions and the management approach to sales success – not to mention customer value - can also be appreciated from the model.

A company looking to improve its revenue and profit can do so by working on the factors in their value chain that drive sales productivity, and by ensuring those factors have not become barriers to sales success.

The rest of these blog posts provide insight into the operation – link by link - of the value chain using the information gained from my interviews and surveys.

Next post: Sales Management (or how to increase revenue by up to 64%!)