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Driving Your Organization’s Sales Capabilities Through Deep Sales Organization Analysis

Driving the sales capability of your sales organization has often in the past relied on the intuitive skills of a one or two people within the organization. For small businesses this practice is may be acceptable but once a sales organization has over ten members, intuitive management no longer supports the businesses growth. Often intuitive management goes hand in hand with low structure and process installed within the sales organization, which can actually inhibit you further.

“Top performing companies typically are those that have stepped back and taken an independent view of their business to refine and improve how they operate to ensure they sustain a competitive advantage. And they do that regularly.”

This action is common place in business operations, where a manufacturing or distribution area reaches a certain size or volume throughput, it must be supported by systems and processes to continue delivering the required output. Some adopt lean practices and others install other manufacturing and distribution methodology; all with the same intent to improve performance and lower costs to deliver. Without such actions being taken, the business has immediately capped its output and profitability. The same applies for sales organizations but they are often more wary of having any other opinions or reviews provided that may challenge their current thinking.

The review of sales organization is in itself a disciplined process that combines best practice with business disciplines and sales disciplines. It looks deep into the both the sales process and the business practices operating around that sales process. We call it Deep Sales Organization Analysis.

Deep Sales Organization Analysis (DSOA) is designed to drive sales capability through identification of the right changes and improvements required within the sales organization to reach its growth and profit expectations. DSOA assists organizations to:

  • Identify those sales activities that are critical (and not critical) to winning business;
  • Standardize sales processes, based on best practices;
  • Remove wastage of non productive time and tasks;
  • Identify full capability of the sales organization for resource management;
  • Minimize costs associated with sales organization in both direct and indirect costs;
  • Support customer management capability with consistent, measurable sales processes and activities;
  • Improve the predictability of sales processes and results;
  • Improve the management of the sales pipeline, from expanding the size of market opportunities to increasing win rates;
  • Understand the velocity of the pipeline; and
  • Raise the level of performance of sales forces across all members.

Successful companies are aware that the careful alignment of each of those components is vital in supporting growth and profitability.

Each action must all be carefully integrated ensuring that no gaps or chasms that can or potentially will negatively impact other functions and processes remain. The output of DSOA is the identification of all levers and actions that will drive your sales organizations capability in the future.

When senior executives consider engaging in projects like DSOA, they give major consideration to their desire and requirement to increase profitability being paramount to how the business is managed, valued and recognized in the market. However, when senior executives are considering improving their organizations sales capability, they are often met with resistance. Particularly from those who have held responsibility for sales and managed intuitively over the years. For them and others, they are wary of DSOA as it looks deep inside the organization and people fear what may be exposed in relation to themselves or others around them.

Initially, in my experience, where companies have not previously engaged in review processes within their organizations (operational or sales) they can encounter several major challenges. Often they are met from sales organizations with four major catch cries.

    1. Managing sales as a process.Many people still to this day consider selling is an “art” not a process! Salespeople resist managing sales as a process, preferring to think of what they do as a skill-partly dependent on a sales personality type and uniquely fashioned by the individual salesperson.
    1. Measuring the sales process.Salespeople and managers alike, often consider selling does not have the type of consistent, repetitive activities that can be easily measured, analyzed, controlled and improved. Often these thoughts are linked to point one.
    1. Relationships cannot be measured.Salespeople focus heavily on relationships when they have little other skills to draw on. They communicate the virtues of the relationship as the primary factor in selling and use it as a fear factor to executives considering making changes to how they do their roles.
  1. Our industry is different.A most common catch cry from those that have little experience in other industries. They look to duplicate what their competitors are doing rather than seeking to differentiate themselves and install world’s best practice.

These are all signs of the wary sales executive who operates to his/her own standards and not best practice. They are potentially making decisions that are emotive based not business based as a fear o change may be lurking in the background. Senior executives need to be focused and dedicated to guiding their sales organizations through the process as overcoming these challenges can result in significant benefits to the sales organization, including:

    • Significant increases in win rates on sales opportunities, bids and tenders. DOSA will identify what actions need to be taken to increase win rates. This includes the acquisition of new customers. These improvements can mean adding millions to the top line as well as substantially improving the bottom line through lowering cost of sales.
    • Improved customer penetration and retention. By identification of improved processes and methodologies being applied to customer base, this can increase lifetime value of customers and some can lead to doubling their existing values. This can mean increased profitability and revenue even without the acquisition of new customers.
    • Reduced non-selling time and increased sales force productivity. In many organizations, non-selling time can make up more than half of the available time of a sales person. DOSA focuses on identifying and eliminating waste and non-value adding activities, resulting in significant increases in productivity and sales output.
  • Increased profitability. By stripping out all indirect and lower direct costs associated with the sales organization and immediate impact can be seen in EBIT reporting.

Does DOSA mean change is required?

In most cases, yes, and that is what sales executives are wary of. No improvement will happen in anything unless change occurs. The difference to taking the recommendations of DOSA is through the change you will have a documented road map to guide you through the process. You will be able to drive the change internally without the excessive costs of external consultants to deliver the change for you. Your sales executives can be engaged as leaders of change rather than victims of change.

Is change really worth the time invested?

Like most change initiatives, DOSA requires a serious commitment by senior executives. Gaining that level of commitment comes only from recognizing that there is a substantial financial opportunity to be captured from taking this business step. A DOSA report will provide senior executives with a business case report to validate whether change is worthwhile for your company. The DOSA report will provide projections of potential revenue and profit earnings based on the transformation recommendations being implemented. Typically people provide projections based on simple equations of conversion rates. DOSA goes much deeper into a series of analysis tools demonstrating earnings in improved capacity and processes within the organization.

Is Your Company Ready for DOSA in Your Sales Organization?

To understand your readiness you need to ask yourself the following question. ‘Is your company consistently delivering targeted sales growth and profitability?’

  1. Not at all;
  2. Infrequently;
  3. Somewhat;
  4. Most of the time; and
  5. Always.

If you answered 1-2-3 or 4 then your organization needs to consider applying DOSA to provide the kind of sales capability you need to achieve.

Some Final Thoughts

The careful alignment of the levers within the sales organization is a science and not an art. Making a few changes here and there often becomes the catalyst to more problems being experienced. Companies make the fatalistic error of making minor (or sometimes the wrong) changes that brings them only back in line with their competitors and not setting themselves to be market leaders. Top performers look deep into the sales organization and find ways of differentiating themselves, ways of increasing profitability, operating with maximum efficiency ensuring the best outcomes are achieved.

Vendor Management – The RFP Process

We select our store locations. We select our staff. We select the merchandise to carry; and along those lines, we select our vendors. Selecting the correct vendors – in addition to managing these vendors during the selection process and beyond – can often be the difference between making your store profitable or simply providing real estate for the vendors to sell their goods. It is time to manage your vendors!

So… raise your hand if you have ever conducted a thorough Request For Proposal (RFP) process for you vendors. Anyone? In truth, not many have to the extent that you evaluate multiple vendors, creating competition for space in your store. How you manage the RFP process can and will set the tone for all your go-forward vendors. A well-thought out process to vendor selection, can provide real opportunities for you in the following areas:

Rebates: Did you know that vendors offer rebates based on product placement; rack allowances; product movement and other considerations? In some cases, the vendor receives manufacturing rebates that you need to ensure are passed onto you. The RFP Process ensures you identify and capture your fair share.

Incentives: The vendor is in your store for one thing – to sell their product. Meeting the goals of the vendors should only be achieved if they are aligned with your goals. What types of incentives do you vendors provide you in order to meet that goal? Work with the vendor to establish incentives for each party that foster alignment.

Deliveries: You pay for delivery whether you believe that or not. Manage the amount of deliveries to your store on a weekly basis so that you have enough inventory on hand, but not so much that you are paying full-load delivery fees for partial deliveries. You may want to consider adjustments based on seasonality.

Never Out of Basics: All stores carry that “MUST HAVE” product that you can never be out of – ever! Identify your “must have” products and ensure that you and your vendor have a clear understanding on the ramifications if any of these products are ever out of stock. Build in financial penalties for the vendor if you are shorted product on your core offerings.

Marketing: Identify programs and investments that your vendor partner will make in advertising and promoting their products. These should be managed in concert with your overall marketing of your store and determined jointly with the vendor to ensure their financial obligation, as well as timing.

Payment Terms: Standard policy is net 30 days, but have you inquired about discounts if you pay earlier? In some cases, the squeaky wheel gets the oil and if you are in a position to negotiate more favorable payment terms, do so.

Product Returns: Have you established a specific contractual obligation on product or damaged returns? Re-slotting fees and other incremental mark-ups by your vendor with regard to returned products could eat away at your gross profit. In addition, now is the time to establish the process for replacing damaged products.

Contract Terms: How long are you committed to this vendor and what are the “out clauses” in the contract should a better vendor come along? The best place to negotiate this is during the RFP process when the vendor is hungry for your business.

Mark-Ups: Every product you purchase comes with a corresponding markup – or the manufacturer/vendor profit. Most of these markups are determined by a category of products as opposed by the product SKU. Knowing your industry markup ranges by category will better prepare you in establishing the best cost structure for your product acquisition.

Conducting a thorough RFP Process is critical for establishing not only your pricing structure with your vendors but also in developing the process in which business is conducted. Remember, vendors are in YOUR store and it is up to you to determine the roles that each of them play. If you do not take control of your vendors from the onset, you will face an uphill battle within your own store. Or as Winston Churchill once said, “he who fails to plan is planning to fail.”