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Measure More Than Sales Force Efficiency

For the most part, organizations are run with the expectation of driving greater efficiency and productivity. Retailers are expected to improve their revenues per square foot, hotels and airlines strive to improve their yields per seat/rooms, and the mantra is one of constantly doing more with less.

But it is worth remembering that this dynamic is not universal. As William Baumol famously highlighted, a string quartet always has and always will need 4 people, no matter what they earn. Inherently, the complexity of true art requires a certain degree of inefficiency.

And in my opinion, companies should remember this principle when measuring the relative efficiency of their own sales force.

We are increasingly hearing companies cite that reps have become relatively less efficient on a per head basis, even as the rest of the company makes a lot more revenue per head.

The implication is that the direct sales force might need some pruning and that people aren’t pulling their weight. Lean selling is the antidote that’s often prescribed. After all, the rest of the corporation is being run with fewer people so why should the sales force be exempt from this dynamic?

But a fundamental flaw in this judgment is failing to account for the amount of time and “art” it typically takes a rep to complete a new sale. For selling, and complex solutions selling in particular, it requires a slow interaction which ebbs and flows between groups of people who are trying to generate value for each other.

This does not mean you should throw down the towel and retreat from driving efficiency.  But it does mean you need to reset your productivity expectations.

And the best way to do this is by identifying the different kinds of sales that exist, and the time it takes reps to complete each of them.

From my experience, sales can be classified into three categories:

1. Repeat Sales—The process of customers replenishing products and services to fulfill a known need is relatively straightforward and should become more productive over time. In fact, the most frequent purchasers of your offerings might be most open to conducting transactions electronically.

Ideally, your reps do not spend too much time on these sales and our research on rep profiles finds that ‘hard workers’ are more likely to excel here. Allowing time and resources for “art” to happen in this environment is not necessary. This is the kind of environment where knowing exactly how time is being spent can deliver large returns. (SEC members can take a look at our work on ‘Shifting the performance curve’ for insight into how to do this.)

2. One-off Large Deals—These sales require the bulk purchase of large amount of goods and services. The obvious example is the construction of a new facility which requires the one-off purchase of substantial amounts of goods and services. You likely need to bid for these sales and the final decision depends on the input of many stakeholders.

These kinds of sales are a lot slower and sales managers need to ensure that reps spend their time wisely, either by helping reps innovate around the deal when possible or moving reps off the deal if it looks as if the sale won’t close. It’s a balance between allowing time for “art,” but keeping a mindful eye on efficiency.

3. New Business Development—The time needed for these deals is hardest to predict since it won’t be known to either you or your customers exactly how the purchase is going to happen. These deals have the longest sales cycles and it’s these kinds of situations where sales most resembles playing in a string quartet – a true art form – and the challenge for these reps is to make sure that they can effectively orchestrate a close amongst various stakeholders.

Once you’ve categorized business, you can determine how much time reps are going to need to meet their quotas. You certainly don’t want your best reps in a service role but you also need to make sure that you haven’t cut capacity to the point where you no longer have the capacity for more sophisticated solutions sales.

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