GE Capital What are the key components of a sales force effectiveness program?

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1 What are the key components of a sales force effectiveness program? overview

2 What are the key components of a sales force effectiveness program? Sales representatives have always followed a straightforward, numbersbased roadmap: Make X number of cold calls, log X number of appointments, pound X miles of pavement, and, if you re good, the sales will come. The trouble is, roadmaps no longer cut it in the GPS world, where sales functions are challenged as never before to build a disciplined, scientific sales approach that drives greater results. Building a sales force effectiveness program means shaking your sales function free of ingrained behaviors that prevent it from achieving optimal results. Sales force effectiveness begins with a commitment by senior leaders and sales leaders to create a sales strategy based on: Assembling a strong database that gives broad insight into your current and potential customers Efficiently aligning your territories and resources Aligning sales targets with your business goals Setting goals and assessing sales representative performance based on territory potential Creating an incentive plan that motivates your representatives and gets them on board with the program Putting these elements in place can create a built-in, sustainable platform for continual growth both in your organization and in your representatives careers. What are the key components of a sales force effectiveness program? overview 2

3 Building a sales force effectiveness program means shaking your sales function free of ingrained behaviors that prevent it from achieving optimal results. Image #1: What are the key components of a sales force effectiveness program? Quantify & Prioritize Customers/Prospects Set Targets & Assess Performance Increase Potential Phase 1: Understanding current and potential customers Does your business categorize customer potential? How is that information utilized? Is there a system and methodology? And who owns the process? Due to a number of factors the geography of their territories, their personal relationships, their comfort zone many sales representatives spend too much time trying to squeeze sales out of low-potential clients while high-potential prospects get little or no attention. If your representatives have focus and are fishing where the real opportunities lie, they will log more calls and meetings from a more select pool of prospects, and this will translate into more sales. Getting to that stage requires actionable, organized data and analysis of that data, which involves: Establishing a customer database. Your database should include both current and prospective customers, and descriptive details on those customers including sales potential, buying cycle patterns, and probability to convert a deal. Having good, up-to-date data is crucial. Calculating customer potential. Assign a dollar value and probability of success to each record. Align & Deploy Territories/Resources Pay for Performance Prioritizing your customers. Create a tiered system that groups customers and prospects by potential (tier 1, tier 2, etc.). Operationalizing the process. The database needs to be constantly updated and reviewed, both through research and through the insights your sales representatives bring back from the street. If your representatives are fishing where the real opportunities lie, they ll log more calls and meetings from a more focused pool, and this will translate into more sales. Phase 2: Aligning and deploying your territories and resources How are your territories aligned today? Is there a logic and process behind this alignment? Is it based on the potential of the territory? Are there opportunities to enhance alignment? Asking and answering questions like these can help you improve your coverage rates and cost of sales by optimizing team size, territory alignment, and resource deployment. Your ultimate goal is to maximize overall penetration by identifying coverage gaps, covering top-tier customers and prospects more effectively, and giving yourself a mechanism to correctly evaluate sales performance. Key elements of this stage include: Determining your appropriate team size. Assess your current team size versus total potential, then model using the financial or workload method. Identifying the undercovered/overcovered potential of individual territories. Assess your territories (number of accounts, quality, density) and evaluate your resource and coverage levels for those territories. Identifying opportunities to optimize resources and territories. The results of your evaluation can allow you to increase or reduce the number of individual territories; create compact, travel-efficient territories; reassign representatives to achieve balanced territory potential and workload; reconsider the allocation of sales support resources; and resize the sales team based on your business goals. What are the key components of a sales force effectiveness program? overview 3

4 Phase 3: Setting targets and assessing performance How does your business set its sales targets and budgets? At what level are they set, and who sets them? How does your business evaluate performance? Optimizing your sales force requires aligning targets with your business goals, devising a methodology for setting targets and assessing sales representative performance based on territory potential (e.g., its richness in revenue potential based on density, etc.), and aligning your compensation plan with those targets. Doing so means: Conducting a frontier curve analysis and/or assessing potential by territory. Calculate each territory s percentage of total potential and plot your sales representatives in terms of performance versus potential. Setting and allocating targets based on frontier curve or territory potential. Set your targets to frontier level and allocate operations plan targets based on territory potential. Increasing or reducing performance based on adjusters. Identify factors used to reduce or increase performance (density, tenure, legislation, etc.). Compare the operating plan to the previous year s performance (targets and results, etc.), and adjust targets accordingly. Phase 4: Paying for performance Do you like your team s variable incentive compensation (VIC) plan? Do you understand the plan? Does your sales team? Are there opportunities to enhance the plan? The answers to these questions can help you build levers into your incentive plans to motivate the right behavior and align individual objectives with business goals. You may want to analyze the basic components of your VIC plan and judge whether it pays for performance in a controlled, transparent way. Key steps include: Assessing VIC design components. Identify the businesswide metrics that could be mapped to the sales function, and design a VIC plan that incentivizes such results and behaviors. Ensuring adequate analytics and controllership. Undergo rigorous and constant evaluation of your payout and controls. For instance, how are metrics, targets and results calculated and verified? Who approves exceptions? Is the aggregated VIC payout consistent with business result expectations? Rolling out communications. Ensure documentation clarity, give plenty of notice, communicate clearly, and ensure transparency. Phase 5: Penetrating the market Remember that a sales force effectiveness program does not ensure a strong sales force. Market penetration is crucial. You can achieve strong penetration with careful customer planning that includes call plan generation, detailed account planning, understanding operating rhythms, sales forecasting, and pipeline management. Great team management is also essential, incorporating coaching, recruiting, managing remotely, motivation, and strategic thinking. Think about your best salesperson and ask yourself, How do I get everyone to sell like this person? Developing sales talent to match organizational needs Sales force effectiveness is a matter of creating a system based on actionable information and the efficient use of time and resources. But after you ve put the system in place, will your people have the skills to operate within those efficiencies and further your organizational goals? To prepare its people for changes in strategy, markets, technologies, and economic realities, your sales organization needs to champion the talent development and learning process from top to bottom, viewing it as a critical and ongoing part of your toolkit for success. You need to: Create an employee competency model. A competency model defines the knowledge and capabilities the organization expects of its people at every stage, from entry level through leadership. Crafted strategically and updated regularly, it can serve not only to train your people to a high baseline standard, but also to shape the organization that you envision. Assess competencies to discover needs. Analyzing individual employees competency assessments can show individual gaps, but analyzing all employees assessments in aggregate can show systemic opportunities and give a roadmap for organizational training needs and priorities. Focus training on the most vital competencies. In pressing for large-scale organizational changes, focus on those that will have the most immediate and far-reaching impact and provide a platform on which further learning can occur. Educate your people on the expectations of success. If your people know how and when they ll be assessed on their new proficiencies, they re more likely to mainstream them into their daily operating rhythm. Reinforce from top to bottom. Sales leaders and managers must be fully engaged in training and development, helping representatives transcend old habits, jump on board with the new behavior, and become its champions. What are the key components of a sales force effectiveness program? overview 4

5 Think about your best salesperson and ask yourself, How do I get everyone to sell like this person? Creating great penetration involves: Thinking strategically about your accounts. By documenting an in-depth understanding of an account and a full assessment of overall opportunity, you can build credibility and improve negotiating performance. Stressing the economic value of your product. If you use your customer data to quantify and illustrate the value of product features and benefits relative to the next best alternative, this can improve your win rate and margin capture. Optimizing your customer experience. If you understand your customer needs, optimize the customer experience at each touchpoint, and offer solutions that improve the profitability of your client, you can capture share of wallet and retention. Unearthing unmet needs. If you develop a system to scan prospect information, identify events likely to result in sales, and notify sales professionals, you and your sales team will be alert to unmet needs in both existing and new customers. This can lead to increased win rates and reduced acquisition costs. Key takeaways Sales are the lifeblood of many successful businesses; however, many companies are not using their sales force as effectively as possible. Companies can benefit by examining their existing sales performance, tracking, and management practices and by identifying areas for revision, enhancement, or change. Things to consider: Keep the information flowing. You are only as good as the quality of your data. Having rich, actionable, up-to-date data arms your sales force for success. Look to your A-list. Assess what your greatest salespeople do and incorporate those practices into your program. Lead from the top. The most senior commitment is needed to make changes in your sales process. Refresh the well. Have your sales team reinform your process with what they learn from clients and from being on the street. Plug the holes. Constantly evaluate where breakdowns occur across your sales cycle. Create more deals than you find. Strategically go to market and look for unmet needs. GE Capital (NYSE: GE) works on things that matter. GE Capital offers businesses and consumers around the globe an array of financial products and services. Providing more than money, GE Capital brings insight, knowledge and expertise to every loan and lease. Not just banking. Building. For more information, visit or follow company news via Twitter (@GECapital). Copyright 2012 General Electric Capital Corporation. All rights reserved. This publication provides general information and should not be used or taken as business, financial, tax, accounting, legal or other advice. It has been prepared without regard to the circumstances and objectives of anyone who may review it; therefore, you should not rely on this publication in place of expert advice or the exercise of your independent judgment. The views expressed in this publication reflect those of the authors and contributors and not necessarily the views of General Electric Capital Corporation or any of its affiliates (together, GE ). GE does not guarantee that the information contained in this publication is reliable, accurate, complete or current, and GE assumes no responsibility to update or amend the publication. GE makes no representation or warranties of any kind whatsoever regarding the contents of this publication, and accepts no liability of any kind for any loss or harm arising from the use of the information contained in this publication. GE, General Electric Company, General Electric, General Electric Capital Corporation, the GE Logo, and various other marks and logos used in this publication are registered trademarks, trade names and service marks of General Electric Company. You may not use, reproduce, or redistribute this publication, any part of this publication, or any trademark or trade name without the written permission of GE. What are the key components of a sales force effectiveness program? overview 5