FOUR LEVERS OF CHANGE

Last week we began a discussion on the four levers of changing a sales force as posited by Rackham and De Vincetis. Recall that they are: (1) A clear vision of where and how to create value in the market, (2) New structures to focus on value creation strategies, (3) Capacity building to enable value creation, (4) Metrics and compensation aligned to value creation strategies.

While none of these levers can work alone, each is an essential tool for a successful change effort.

Almost every Jamaican knows someone who was brilliant as an adolescent, but lacked vision and focus, and underperformed as an adult.

CHANGE LEVER 1

A value creation vision.

The most important factor in creating real improvement in sales performance is focusing on your vision. You need a clear sense of which customers matter most and what has to be done to succeed with them. This is the essence of fusing marketing strategy and sales management—segmenting and targeting the right customers, and positioning the brand favourably and helping the sales force to focus on the right people.

CHANGE LEVER 2

Structure for value creation.

Recall that there are three types of sales—transactional, consultative and enterprise, and that each has its own peculiarities and characteristics. In the transactional sale, efficiency is key. Efficiency is about opening many doors and covering many customers adequately at the lowest possible cost. Because transactional customers tend to know exactly what they want and are extremely price-sensitive, your structure must make acquisition of your product or service as efficient as possible. Like getting cash from an ATM instead of going to a teller in a bank.

In the consultative sale the value sought switches from efficiency to effectiveness. A consultative salesperson can create exceptional value for both buyer and seller by acting as a broker of capabilities—someone who balances the needs of both buyer and seller to the benefit of both parties. But first they must have the capability to do so.

Enterprise customers are very large organisations that demand exceptional value, and in our Caribbean context there would be few, if any at all for most sales organisations. Because enterprise sales are made to a very small set of unique customers, and CEOs are often involved, they require a separate structure from the ones that best serve other customers.

CHANGE LEVER 3

Capacity building.

Let’s assume that you have a very clear vision of what you want your sales force to achieve. And let’s further assume that you have the right structures in place to adequately serve your preferred target markets; the next critical step in the process of changing your sales force is capability building. Given that there are so few enterprise customers in our Caribbean region, I will speak only to the transactional and consultative selling environments.

Transactional customers, you will recall, don’t want help, advice or problem-solving from salespeople. The trick in transactional sales is to use the sales force more efficiently and to find cheaper ways to improve coverage. Keep them sharp, and don’t waste your training budget. A ratio of 20 transactional sales people:1 supervisor is generally considered adequate.

Success in consultative selling goes far beyond the psychology of selling or persuasion. It requires that the sales force translates what Gerald Egan describes as skilled helpers who master the problem-management and opportunity-development approaches to psychology into the business environment.

Critical to the process is the supervisor who, as the coach, develops the skills and competence of the sales force. As a rule of thumb, effective consultative selling capability requires a salesperson-supervisor ratio of 8:1.

CHANGE LEVER 4

Metrics for value creation.

Perhaps the most common approach is to measure activities rather than results. Bad idea; because salespeople measured on activity will produce activity.

•Align metrics with rewards. Beware of measuring the profitability of accounts but rewarding the salespeople for volumes. Design the metrics first, and then design the reward systems for achieving the metrics.

•Measure the import rather than the urgent. There will always be a steady flow of urgent matters in a sales organisation, but never let them always take precedence over important metrics such as coaching the sales force to deliver higher performance levels. Be sure, therefore that clear coaching targets are established and met regardless of the urgent, but often unimportant issues at hand.

•Use metrics that salespeople can influence: There’s danger in measuring, for example, sales volumes only, for that is often beyond the control of salespeople who don’t set prices or determine marketing campaigns that are crucial in determining sales volumes.

•Measure what matters, not just what’s measurable: A great example is the importance of measuring customer satisfaction, even if the results are not precise.

•Involve salespeople in the metrics design and data collection: This is one case where the collective approach has many positives.

•Review. The need for a review process to determine the relevance and effectiveness of what we are achieving cannot be overstated.

THE LAST WORD

Managing a sales force, as we have stated repeatedly is a tough job. Indeed some claim that given their individualistic nature, it is pointless trying to manage a sales force; and that what is more effective is creating a self-managed team, and leading them by your own example to accomplish what really matters for your company and your clients.

Sounds good in theory. But is that mission impossible? What do you think?

Herman D Alvaranga FCIM, MBA, is president of the Caribbean School of Sales & Marketing (CSSM). For more insights on sales and marketing please visit his blog at www.cssm.edu.jm