Transforming the Sales Force

ZS Associates | www.zsassociates.com

Transforming the Sales Force Anticipating the Journey

SMA Sales Force Productivity Conference October 24, 2012

Mike Moorman Managing Principal, ZS Associates

SMA-2012-SalesTransformation-MikeMoorman-ZS

© 2012 ZS Associates − 2 −

Sales & marketing effectiveness is achieved by focusing on the drivers & their interdependencies

Channels & Sales Force

Structure

Value Proposition

Strategy

Segmentation & Growth Strategy

Customer Engagement

Process

Customer Insight

Competitor Insight

Market Environment

Marketing Programs

• Marketing Mix • Demand Generation • Lead Nurturing • Sales Force & Partner Enablement • Community Building

Operations (Sales,

Marketing, Channels)

• Data & List Management • Sales Admin • In-line Forecasting • Reporting • Analytics • Agency Management • Platforms & Systems Management

Sales Resources

• Sizing • Territories • Account Targeting • Territory & Pipeline Mgt

• Segments • Capacity

Planning

Knowledge, Skills &

Behaviors

• Culture • Competency Model • Hiring • Training & Coaching

• Benefits & Rewards

• Partner Program Management Motivation

• Performance Measures • Incentives & Rewards • Performance Reviews

Tools • Sales Process & Decision Support Tools

Sales Force Channels

Market Insight Go-To-Market Strategy Operational Excellence



The path to success is not always the same

Year-over-year continuous improvement

Transformational

Larger scale strategy &/or capabilities change

Incremental



The Transformation Journey – A Case Example

• Manufacturer of injection molding equipment

• Complex customer landscape • Mold Makers • Molders • End-Users

• Industry leader at ~15% share

• Global operations and

customer base in diverse industries

• Complacency at many levels

• Increasing number of global customers

• Low market growth

• Diminishing technology advantage, aggressive and rapidly growing competitors

• Experiencing declining share, and slightly declining price premiums



“Can’t we just provide training and change the sales force’s incentives?”



A deep dive evaluation resulted in important insights & precursors to successful change

I. Sales Strategy

• Customer Needs, Buying Processes & Potentials

• Segmentation • Growth Strategy • Market Offerings & Value

Propositions • Pricing Strategy

II. Market Coverage

• Sales Force Structure & Roles • Sizing & Allocation • Territories • Account Targeting

III. Sales Process & Tools

• Sales & Service Process, Activities & Roles (CRM Strategy)

• Sales Tools & Enablers

VI. Sales Support

• Sales Administration (Territories, Goals, Incentives)

• Reporting (Standard, Ad-hoc) • Analytics (Standard, Ad-hoc) • Account Universe Data &

Systems

IV. Knowledge & Skills

• Competency Model • Hiring & Selection • Training • Coaching

V. Culture & Motivation

• Sales Culture • Measures & Reporting • Recognition & Rewards • Goals • Performance Reviews

Workout 1

Workout 3

Workout 2



First pivotal moment: “We’re good, but need to be far better”

1. Improve coverage of the most valuable accounts

2. Increase the impact of each and every sales call

3. Instill a performance focused and accountable sales culture



Laun

ch

Transformation requires a systematic, fact-based approach to strategy design & sustainability

May June July Aug Sep Oct Nov Dec

Customer Insight & Segmentation

Sales Force Structure & Sizing

Territories Design

Baseline Value Proposition Sales Process & Tools

Dashboard & Performance Mgt.

Competency, Selection & Hiring Training

Sales & Marketing Operations Capabilities

Incentives Plan Goals Setting







Role pollution, too little selling time

Not covering all key growth accounts

Best talent not on most important accounts

Too much field sales effort on small accounts

Heavy & light territories



Quality estimates of account-level potential were key to a new growth strategy, sales force optimization, and goals setting

0

500

1,000

1,500

($ 0

00s)

Average Estimated Potential and Sales (US)

Value Segment 1 2 3 4 5

Accounts 42 125 187 434 2,351

Avg. Annual Pot. ($000s) 1,470 316 142 74 33

Avg Annual Sales ($000s) 364 124 21 18 8

Sales

Potential

Key Accounts Mid-Market Accounts

Very Small Accounts



A detailed review of sales force activities and effort allocations resulted in significant rationalization

Maintain

Current Activities

& Effort

Allocations

Increase

Stop

Re-assign

Decrease

New



Restructuring the sales force improved role clarity, coordination and accountability – while reducing redundant work

Strategic Accounts Manager

(Global & Key accounts)

Field Sales (Mid-market accounts)

• Named global accounts & key accounts

• Executive sponsorship program • Elevated support levels

Inside Sales (Small accounts)

• Named small accounts (and some geographically remote accounts)

• Mid-market customers and global / key account affiliates

• Grow under-penetrated and prospect accounts

Project Engineer

(Global, Key & Mid-market accounts)

• Technical due diligence, order fulfilment administration and coordination of account service & support

• Senior PEs aligned against SAM accounts

New roles



Territory optimization improved coverage and goals fairness

Terr

itory

Wor

kloa

d (F

TEs)

Before

After

Territories Sorted by Target Account Workload(per Account Coverage Plan)

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

1.8

2.0

2.2

Heavy Territories = Lost Growth

Light Territories = Wasted Resource

Acceptable Balance: +/- 20%







Features and price pitches Ad-hoc sales approaches Minimal sales support



A bottom-up / top-down approach proved to be an effective way to break through to the next level of sales process capability

Early Experience Team & Accounts

Full-Scale Rollout

Refined Sales Processes & Approaches Customized Sales Tools & Enablers

Proof Points & Advocates

Competency Model Role Expectations

Hiring & Selection Process

360o Training

Coaching Process & Tools

Performance Review Content

Reward Systems







Pockets of complacency,

order-taking Too tolerant of poor

performers Limited reporting &

management dashboards Slightly declining share

and margins



Rate-gate incentive plans and new metrics drove greater pay for performance relative to critical objectives

SAM FS IS PE SAM FS IS

Goal Based Component = 80% Management by Objectives (MBO) = 20%

Payout curve

0%

50%

100%

150%

200%

250%

50% 100% 150%Goal attainment (%)

% o

f tar

get p

ayou

t

Performance vs. Expectation

Metric Below Meets Exceeds

New product sales

Pricing

Strategic account conversion (SAM only)



Performance reporting, including ranking, proved to be tremendously motivating

Sales Dashboard June 10, 2010

John Smith



Sales leadership was disciplined. No warm body placement or hiring.



Currently tracking significantly above plan, in large part driven by SFE initiative

2009 2010 2011 2012

Base Case Forecast

SST Forecast

Actual

7%

10%

CAGR

28%*

* Projected based on 2010 actuals through mid-September

SST Business Case Projected Share Increase 1.1% 2.1% 2.4% 1-yr ROI 20% 125% 158% 3 Year Discounted ROI 93% 262% 315%

SST Business Case

Projected +2% share point growth and +28% revenue growth for 2010: • ~15% revenue growth

driven by market recovery

• ~13% revenue growth driven by market share gains (from historically flat to declining share position)

Copyright, © 2012 by ZS Associates. All rights reserved. SFE Navigator™

− 21 −

SALES OPERATIONS

Drivers

Guiding the Way to a Customer Focused Growth Engine

SFE Navigator™

SALES FORCE DESIGN

STRUCTURE

ACCOUNT ASSIGNMENTS TO TEAMS

SIZING AND ALLOCATION

TERRITORY DESIGN

SALES STRATEGY

MARKET INSIGHT

SEGMENTATION

GROWTH PRIORITIES

VALUE PROPOSITION

PRICING STRATEGY

SALES AND MARKETING COLLABORATION

LEADERSHIP ALIGNMENT

CUSTOMER ENGAGEMENT

PROCESS

SALES PROCESS

TARGETING, TERRITORY AND PIPELINE MANAGEMENT

ACCOUNT PLANNING

SALES TOOLS AND ENABLERS

PEOPLE AND SKILLS

COMPETENCY MODEL

SELECTION AND HIRING

TRAINING

COACHING

PERFORMANCE REVIEWS AND ACTIONS

MOTIVATION

CULTURE

METRICS AND DASHBOARDS

GOALS

INCENTIVES AND REWARDS

DATA MANAGEMENT LEAD GENERATION AND MANAGEMENT

REPORTING AND ADMINISTRATION

ANALYTICS PRICING AND CONTRACTING SUPPORT

PLATFORMS AND SYSTEMS

Effective & efficient coverage of the full target account universe with a structure

and deployment that best fit the value proposition and sales process strategies

Customer-focused strategy targeting the

best growth opportunities with differentiated

and mutually valuable offerings

Customer-focused and expertly executed sales processes and planning that maximize mutual

value and trust

Sales managers and salespeople with the knowledge, skills and attributes required to

excel at their respective roles and responsibilities

Highly motivated, performance-focused and accountable sales force committed to “getting it

done” and “doing it right”

Highly efficient support capabilities that provide the sales force with the information, expertise, speed-to-market and efficiency needed to

achieve superior performance



Questions?

Phone: 312.233.4804 Email: [email protected]

Mike Moorman Managing Principal, ZS Associates

Transforming the Sales Force

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