Versión en PDF Send this page Versión para imprimir
For many companies, the sales force represents the spinal cord of their organizations. In a multinational such as Avon, a large part of its business success comes from relying on an enormous army of representatives that, door-to-door and living room-to-living room, has shown, tested, and sold its products, giving the company a familiar and personal tone that a large part of the competition lacks.While the cost of personal sales represents between 8 and 15% of a company’s spending, as opposed to the estimated percentage of advertising costs (an average of 1-3%), the effort has paid off for Avon.It currently has more than 3.5 million distributors worldwide, 700 million customers, and a turnover of more than 6 billion dollars annually (more than 2.5 billion dollars go to commissions for sales reps).
Despite all of this, Avon, which remains loyal to its direct sales model, has taken advantage of the benefits provided by new communication channels to consolidate its relationship with the customer through the Internet. From its web site, consumers can purchase any of the company’s products, as well as locate the closest distributor. Although this undoubtedly brings added value, for other companies it has created a conflict: competition among their different sales channels.
Sales activity is fundamental, vital, and very complex. For that very reason, detailed analysis and study of each of the factors that enter the purchasing chain is fundamental in guaranteeing a company’s sales success.
Sales effectiveness (the productive role) and brand care (the representative role, very related to “brand awareness”, which increasingly affects a company’s quantitative valuation) are aspects that are very much considered when selecting, training, and organizing a sales team. But we must go beyond that. Other aspects, such as sales network placement, market segmentation, analysis and follow-up of proposals, post-sales customer service, and correct portfolio allocation are essential to making the manager’s work in specifying operations fruitful.
By putting the customer at the center of a company’s actions and reversing the planning processes- which now begin on the customer’s side-, a radical transformation is occurring in organizational structures, and especially in sales departments. It is no longer enough to decide whether to adopt a “pull strategy” (an attraction strategy in which advertising is used to generate demand) or a “push strategy” (in which the sales force comes to an agreement with the distributor regarding the commercialization of products or services).
Information has completely altered the way in which sales networks can be planned today. The customer generates all types of “outputs” that, when well-analyzed, allow companies to create profiles and segment the market in order to better focus its offer. In this sense, the sales function has been one which has most demanded a correct use of current and potential customer information.
A study carried out by The Economist Intelligence Unit among 178 directors worldwide reveals that 55% of sales teams is incapable of analyzing sales opportunities satisfactorily. 47% consider that those opportunities are not properly managed, while 38% declare that their companies do not generate a sufficient amount of sales initiatives. For the great majority (95%), sales results are average, below average, or good, but not outstanding. The most interesting fact is that precisely the companies most efficient in managing their customer information and translating it into their sales force actions are the ones that are also most efficient in the qualification and management of initiatives. That is to say: a previous, correct market analysis applied to the sales strategy always generates more opportunities and more business. Creating this “opportunity factory” is critical. Using correct information management, every company must be able to establish alarms that warn it about opportunities to obtain new customers and…the risk of losing current customers.
A proper sales plan always begins with a targeting process to determine the target customers. According to this, it will be possible to determine the marketing investments that must be made: how many agents to assign, what channels to use, what actions to undertake, in what period of time, and how frequently to make visits. In short, it is about properly sizing our resources and assigning the necessary ones where it is worth the effort. Once the goals are established, the SMART rule is usually applied: they must be specific, measurable, accorded, realistic, and time-related.
Everything varies according to our target: whether they are final customers, other companies, prescribers, as in the case physicians in terms of pharmaceutical laboratories, or professors, in terms of school book publishers…The former, whom we can also define as “hidden customers”, will not generate any type of income for the company, but they hold the key that allows us to reach the final customer. The most clear example is the pharmaceutical industry, whose best representative is the physician.
Whatever the case may be, customer needs vary, and so does the way to attend to them. To enter into contact with customers, we can use different human resources, each with their different advantages:
The information and guidance obtained from analysis of market and customer data, reflected in targeting strategies, allow us to carry out a proper sales force sizing. Sales Force Sizing does not mean reducing sales channels and agents to a minimum. Sizing means adjusting resources to the potential market.However, calculating the size of the sales force is not an easy task at all. We can distinguish several mechanisms:
Jean-Patrick Tsang, president of Bayser Consulting, opts for a mixed methodiii, which combines the “workload method” with comparison to the competition (“Competitive Benchmarking”: the impact of sales also depends on the sales strategies adopted by the competition) and the response to the company’s sales actions (sales generated by specific marketing actions). That is to say: the important thing is to control a triangle in which the customer, competition, and market define the three sides of the sales strategy.
When we know which customers are most interesting (targeting) and we have a correctly sized sales force (sizing), the next sep is assigning the proper sales and marketing investments to each customer (customer allocation). Telecommunications companies such as Telefonica accurately distinguish between large accounts, small and medium-sized companies, and the consumer market. It is not a matter of treating the first ones well and the second ones poorly, but rather distinguishing what customers with different profiles have different needs, and therefore require different sales efforts and distinct offers.
Focusing on the customer as a starting point allows better resource distribution: determining the number of times the customer will be contacted, deciding which channels will be used, etc. The most profitable customers will need the greatest attention, we can apply a pro-active sales strategy to them, in which the initiative comes, whenever possible, from the company. This gives rise to what is known as allocated or selected customers (to use a term from the sanitation industry). They represent a small percentage within companies, but they make up the most profitable target. In banking, it is estimated that around 10% of customers are allocated, although the amount of information that financial entities accumulate on their customers should allow the sector to refine its sales and marketing strategies greatly.
The organization of the sales force can be carried out using anything from the customer to the sales function as a differentiating parameter. The results and effectiveness of different cases are very distinct. The most common organizational method is geographical: assigning resources according to a specific sales area, whether it be postal codes, “Nielsen regions”…This allows us to simplify the relationship with the customer, who deals with only one contact person. However, when a sales rep must undertake the promotion and sale of an extensive range of products and services, his or her knowledge of the solution portfolio is diminished. The absence of specialization affect a company’s efficiency very negatively.
In any case, it is always necessary to establish a detailed level of geographical organization for the sales force. As in customer segmentation, the territorialization of sales reps improves their efficiency if they are focused on small areas as opposed to very large areas, because it is easier to assign accounts to a specific and well-defined area, than it is to a very large area such as a country or province. Postal codes are becoming more and more what allow us to specify more homogenous and practical territories, since they identify the potential market not only geographically, but also socio-demographically. Once we have established what we call a basic control unit, we can calculate the sales potential for each one and analyze the workload before assigning resources.
If we opt for a sales organization by product, it is possible take advantage of the greatest degree of sales agent specialization, but if we do not apply mixed methods, there will be a duplication of efforts and costs. Some companies have opted to organize their sales forces based on the function it carries out. In this way, they use a team for customer prospecting, contact, negotiation, and closing sales, and a different team for post-sales service. The problem is that, when we associate the best forces with the first of these two tasks, performance suffers. Also, the customer usually rejects having a different team attending to him or her after closing a sale.
Market changes are affecting sales network models and sales force effectiveness. Traditional planning mechanisms now work side by side with new methods of a mixed character that try to take advantage of proposals. According to the market a company aims for, Michael Porter distinguishes between three types of strategies:
There are usually three generic sales planning models that more accurately describe companies’ attitude towards the management of their sales forces. Large companies tend toward a centralized model, in which intensive use is made of customer intelligence, but in which strict, mandatory objectives are set by sales management. This leaves little flexibility for sales agents, but it allows us to align the entire organization around the same objectives. The de-centralized model is the opposite. It is more creative and the guidelines set by management are orientative. The problem with this is that the effort is focused on customers known to have greater growth possibilities, leaving behind those with great potential, but for whom information is lacking. Companies are opting increasingly for mixed models, in which general guidelines are set, but a certain freedom is left to the business units to look for new initiatives and opportunities.The important thing is to carry out an advanced customer allocation, with which we can assign the necessary resources to specific customers in order to improve efficiency in the relationship, by offering each consumer what they need using the necessary channel and method.
Channel assignment is becoming a critical aspect in sales force management. There are basically two channels: direct and indirect. In the first, the company directly commercialized its products or services onto the market, but in the second, it relies on intermediaries, who are less controllable, but who offer a series of advantages: they are experts in their sector, they have greater negotiating power since they represent a large market share, and they have more ability to sell complete service packages. The problem arises with what Philip Kotler calls “disintermediation”, that is, the progressive elimination of intermediaries in order to make the sales action as profitable as possible. In some cases, companies look to obtain a greater profit by selling the product directly to the final customer, but in others, they must open new channels in order to generate more added value for the customer as a retention method.
Disintermediation is commonly associated with the arrival of the Internet. Some companies, who began their activity relying on direct sales, such as the on-line bookstore Amazon.com, which already outsells the famous “physical” library Barnes&Noble, have taken extraordinary advantage of the Internet, but others have had to face a dilemma: can we maintain a distribution network and also sell directly without hurting results? For many airlines, travel agencies represented their best advance point of sale, but the moment they began selling tickets on the Internet, they took away an important source of income from this type of company.
Iberia is an example of this. In 2004, the company reported 2.065 billion euros in revenue from Internet sales alone, which proves the significance of this channel for the company. This situation is forcing travel agencies into specialization. To differentiate themselves, they are opting for niche markets.
In other cases, a deficient channel strategy has led some companies to compete with themselves. Some multinational IT companies have tried to resolve the duality between channel and their own sales force by opening business possibilities to internal agents and diverting product delivery to the channel. This method’s inefficiency is clear: higher costs, poorer service, and customer confusion.
Technology use and business intelligence are playing an increasingly important role in the execution of the sales strategy. Sales Force Automation (SFA), together with CRM and EMTS tools, has become the answer to many inherent problems in managing sales forces and networks. The use of integrated information systems with which to organize and analyze the company’s customer and market situation allows us to be more practical and efficient when it comes to making sales provisions, controlling orders, maintaining constant communication with the entire sales network, and analyzing sales performance.
While technology is helping to improve the efficiency of sales organizations, we can not be as sure that sales representatives have completely embraced these new tools. We must not forget that our accounts are in our sales reps’ hands, and it is they who have their finger on the pulse of the customer. Many salespeople are reluctant to “throw” all their customer information- a good salesperson always considers the customer as “theirs”, and not the company’s- into management software so that data collected over many years can be shared by the entire organization. This makes sense: the best guarantee of a salesperson’s survival and promotion to the heart of the company is the knowledge they possess about their customers.
The solution, then, is information exchange: the salesperson must be an ally of Sales and Marketing Management, and vice-versa. The salesperson must share information on “his” or “her” customers, but the company must provide the salesperson with accurate clues as to how to sell more and better, and thus achieve or surpass their objectives. This is only possible if the organization has implemented a Sales Intelligence strategy.
First publication in marketing and clients strategy
All the keys to getting the most critical marketing decision right Abstract Toughening...
Have you ever wondered why it is so difficult to find a President or Director General that has...
