In parts one and two of our blog series on sales utilization we’ve had some fun with the idea that sales organizations have more in common with Legos that you might initially think. Sales Leaders are like Lego® Master Builders–they must design something that meets a clear vision, works, is based on sound principles, but also doesn’t resemble every other “build” out there. We introduced the sales utilization framework as a tool for Sales Master Builders to build highly productive sales organizations and discussed chapters 1, 2 and 3 of the “instructions”: Investment, Alignment and Execution. When it comes to a Lego build, those chapters help us ensure we have the right type and quantity of pieces, that we assemble them in the right way and that the end result gets used rather than just sit on our desk. For sales leaders, chapters 1 – 3 address the allocation of sales investments, the design and assembly of sales programs (e.g., territories, quotas, sales compensation), and whether the sales organization is delivering what’s been asked.
Addressing the Problem. As we noted in part two, under-utilization can be a significant drain on productivity. Using Alexander Group’s benchmarking database, we find that under-utilization can impact sales productivity between 5 and 25 percent. Critical to evaluating and improving sales utilization is selecting the right metrics and building them into the ongoing management system for the sales force. That’s where the Sales Utilization Framework can help. It serves as a valuable guidebook of design principles for sales leaders. It has five parts or chapters: Investment, Alignment, Execution, Perception and Results. We introduce chapters 4 and 5 in this installment of our three-part blog series.
Chapter Four: Perception. As part of chapters 2 and 3, we built a Formula 1 race car and raced it around the office. Chapter 4 focuses on Perception. On the surface, perception can be as simple as “Was the race car easy to build?” or “Did I have fun?” But a focused effort measuring sales perception represents a significant opportunity for Sales Master Builders. Measuring perception leads to important insights around sales programs and their impact. The example below is from an enterprise software company. While a gap between what the field views as important and the company’s effectiveness is relatively common, what stands out is the size of the divergence.
As part of an overall assessment of sales effectiveness, the above findings helped management recognize the need to re-design a range of programs including the lead generation process, account coverage and prioritization, the sales process and enablement programs. For Sales Master Builders looking to measure perception, important focus areas should include segmentation and targeting of the market, the company’s value proposition, coverage, the sales process, job clarity and focus, development and compensation. With the field’s input around what’s important and how the company is doing, senior management is better able to evaluate the success of programs underway, course correct (or reinforce success) and prioritize new investments.
Chapter Five: Results. The sales organization is ultimately measured on the results they deliver to the organization. Did they meet the sales targets and expense budgets? Results tell us how well we did, whether we made good decisions and how much we’re being paid. In terms of reporting and analytics, there tends to be an overabundance of results-based metrics–which isn’t a surprise given the nature of available data in many organizations. But too often results are tracked, congratulations (or reprimands) shared, and the sales organization moves on to “What have you done for me lately?” This is a missed opportunity for Sales Master Builders. Within the context of the sales utilization framework, the Results chapter serves as a critical feedback mechanism for chapters 1 through 4. For our Formula 1 Lego car, we might think about the results of how much the car was played with or whether it won the “Office Grand Prix.” But we miss an opportunity if we glory in the big win, put the car back on the desk and go straight online to buy a new box of bricks.
Course Correcting: Strategic vs. Tactical. As an element of the Utilization Framework, a careful analysis of results has both strategic and tactical implications. It might be that the best course of action is to enhance our current strategy: Ensure we buy the right pieces for a new car and get the best deal, as well as rotate the wheels to maximize speed and carve out time in our busy schedule for the next race. Alternatively, we might conclude a new strategy is in order and that we should be in a different race altogether; perhaps an interplanetary grand prix for space cruisers. The results measurement challenge is commonly one of focus. With so much data available, finding the right feedback metrics can be difficult. Metrics should be selected and used in two important ways: 1) Ongoing success of the business–the dashboard and report metrics used in the day-to-day management of the organization (running the race). Operational metrics are commonly the ones that are available in overabundance and require a critical review to identify the few that are most useful. 2) Testing strategic hypothesis–metrics and analyses that are used to validate strategy and identify new business opportunities. Selecting the metrics for hypothesis testing is part of the strategy review process itself. As part of the process, Sales Master Builders need to identify critical, but specific, questions (e.g., Which race on the calendar is the best one for me?). Based on available data, the best combination of metrics can be identified and put into practice.
Getting Started. For sales leaders looking to improve sales utilization, the first step is to create a baseline. Using the Sales Utilization Framework as a guide, inventory the metrics used to manage the organization today. We’ve mapped some key metrics in the example below:
Next you’ll want to compare the metrics across groups both internally and outside the company. Identify gaps in both the types of metrics (e.g., lack of metrics around perception) and the data collected (e.g., revenue per rep below market). From there, it’s possible to identify actionable improvement opportunities based on findings and determine what metrics need to be collected going forward.
How is your company’s sales utilization? How effectively do you track and manage it? To learn more and to download the eBook on this topic, please go to www.alexandergroup.com/sales-analytics.