Service / Industry: Commercial Excellence
In our three-part series, “Show Me the Money, But the Right Money Please!” A&M Private Equity Performance Improvement Managing Director, Cliff Hall and Senior Directors, Sicco Tans and Troy Temple discuss the framework behind an effective commercial strategy that drives profitable sales, margin improvement, and cash flow.
In Part II of our three-part series, we examined how the sales force is sized, structured, and deployed to uncover and capture profitable growth opportunities.
In Part III of our three-part series, we look at the sales management function within the organization and the importance of aligning incentives, systems, tools, and sales leadership to drive accountability and profitable growth.
SALES MANAGEMENT: HOW DO YOU MEASURE WEEKLY SALES REP PRODUCTIVITY?
Successful sales organizations focus on key activities that drive profitable business, while eliminating distractions that stand in the way. For sales productivity specifically, the industry best practice is for outside reps to spend 70 percent of their time on selling activities.
Recently, a $3 billion company had a five-year plan to increase revenue by 15 percent and increase profitability by 40 percent, but were falling short. Moreover, the CEO was frustrated with inadequate line of sight on sales performance and marketing spend. After a comprehensive study of sales operations (including ride-alongs with field sales employees, and interviews with customers, sales managers, and sales reps), our firm discovered that only 23 percent of daily activity was spent selling. The rest of the time was consumed with non-sales activities such as invoicing, firefighting, and internal communications.
Furthermore, managers were spending only 29 percent of their time coaching sales reps or meeting with customers. To address the issue, our team expanded the role of the central Sales Operations department with clear control over sales and analysis, territory management, coverage models, training, on-boarding and recruiting. The result in the following quarter was roughly a 10 percent reduction in SG&A cost and over a 10 percent increase in profitable revenue.
The takeaway: Nonproductive time can add tremendous cost to your organization while strangling revenue growth. As you begin to reduce cost in other departments, this may add inefficiencies to your sales execution strategy as administrative tasks can end up back with sales, which is ultimately responsible for growing the business. You can address this issue after gaining an understanding of time thieves by creating a cross-functional leadership team to document roles and responsibilities for employees that support sales to free up capacity for your sales team.