Improving Sales Force Performance

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IMPROVING SALES FORCE PERFORMANCE

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OGILVY & MATHER - WE SELL - OR ELSE

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Improving Sales Force Performance

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For further information, or to discuss how Ogilvy can help optimise your budget and marketing plans, please contact: Toni Lee, North America ([email protected]) Paula Bernasconi, Latina ([email protected]) Serge Nicholls, Europe, Middle East/Africa ([email protected]) Soames Hines, Asia Pacific ([email protected]) Other Ogilvy & Mather Booklets available: Optimising the marketing budget in recession How to get more effective advertising Digital in a downturn: smart strategies for tough times The new PR – leveraging digital influence to drive sales and reputation Turning shoppers into buyers Optimising production expenditure and creative assets

CONTENTS Introduction

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Background

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Sales Acceleration

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How is this done?

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Phase 1 – Discovery: Understanding the size and cost of the gap

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Phase 2 – Alignment: Aligning the organisation

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Phase 3 – Enablement: Improving the performance of the sales force

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Phase 4 – Accelerate Sales: Increasing sales conversions

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Measurement and optimisation

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Companies benefiting from Sales Acceleration

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What about technology?

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Getting started

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References

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Published in 2008 By Ogilvy & Mather © Ogilvy & Mather 2008

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INTRODUCTION

“It is not the strong, nor the intelligent who survive, but those who are quickest to adapt.” Charles Darwin

How to use this booklet This booklet outlines areas in which businesses that sell via a sales force or reseller channel can optimise performance to save money, generate more profit and create competitive advantage.

How to increase your profits when times are tough We face one of the most challenging business environments for years. Virtually all businesses today are considering how they will make it through the current global financial crisis. For many of them, cost cutting is seen as the only viable strategy. This, in turn, triggers a reassessment of their expenditure. And right at the top of list are marketing and sales. Perhaps this scrutiny is already underway in your company or it will be in the very near future. If your company has a direct sales force or sells through a reseller channel, then this booklet focuses on a number of options that are particularly relevant in the current economic downturn. This booklet shows you how to optimise your sales force’s performance to save money, generate more profit and create competitive advantage. Ogilvy also offers practical advice on other potential pain/gain points in your company, including: – – – –

Optimising the marketing budget in recession How to get more effective advertising Digital in a downturn: smart strategies for tough times The new PR — leveraging digital influence to drive sales and reputation – Turning shoppers into buyers – Optimising production expenditure and creative assets

These booklets are available on www.ogilvyonrecession.com 2

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BACKGROUND Selling through traditional sales methods is getting more difficult, forcing Chief Sales Officers into an increasingly tight spot. _ The role of sales representative in most companies has expanded from product specialist to solution seller, adding knowledge and skill components to the job which were not known a decade ago. _ The cost of an individual sales call continues to increase — it may be a high as $600 for a single call1. Couple this with the consultative solution selling approach and what may have taken a single call to get an order can now take a half dozen. Admittedly the potential order size increases with solution selling, but for CSOs and their sales managers, it can make for some sleepless nights as sales reps’ forecasts look more like hockey sticks than rocket launches. _ Reaching the decision maker has become a game of ‘cat and mouse’, with experienced ‘gate keepers’ keeping sales contact to a minimum. Live detailing by pharmaceutical reps, for example, may be as short as 6 minutes2. According to the CSO Insights 2007 Sales Performance Optimisation Report, “For the third consecutive year, new rep ramp-up times to full productivity has gotten longer, sales cycles have increased, and 43% of sellers are under quota3. Moreover, as much as 90% of sales opportunities don’t close as forecast4. In a growth economy, the consequences of these statistics are often overlooked in favour of the ‘rising tide’ of top-line growth. But in a down economy, the inability of a company to do something about these statistics can be the difference between profit and loss. In an increasing number of cases, it can also mean the difference between survival and ending up on the corporate scrap heap. 4

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The Chief Sales Officer has a number of tools available to help raise the level of sales force performance. Among these tools are Customer Relationship Management (CRM) systems, virtual and face to face training programmes, role models and experienced coaches. (If 43% are under quota, then 57% are over; somebody’s doing something right). There are also less appealing options, such as culling the sales force of low performers and formal downsizing programmes. At Ogilvy we have begun to offer pilot programmes in an area we believe has even greater promise than these tools alone can deliver. In our experience, we have seen that an untapped source of support for sales force performance is better alignment between the Sales and Marketing Functions. Traditionally Sales and Marketing exist in an adversarial relationship to one another. And in fact the fights are real, if not physical, with each side arguing that the company’s budget could be better spent — by more promotions, if you’re Marketing, or more feet on the street, if you are Sales. The issue is not whether the argument is a legitimate one. It is. The issue is how well do the two functions manage this tension. Recent research by the CMO Council — ‘Closing the Gap: The Sales and Marketing Imperative’ — indicates that in companies where they don’t manage the tension very well, that is, where there is the least amount of alignment between the two functions, performance on some of the key differentiators of top-line success is clearly at risk. Specifically, five differentiators are placed at risk when Sales and Marketing are not aligned. See table overleaf:

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Figure 1: Goals most threatened by poor alignment Goals most threatened by poor alignment of Marketing and Sales.

Leverage benefit of product launches Ability to meet quota Consistent brand reinforcement Ability to sell value over price Ability to differentiate product 0

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Looked at positively, however, there is clearly an opportunity here for companies to leverage an organisational capability that already exists. We call our approach Sales Acceleration and it is designed to both accelerate sales and save costs by creating better alignment between the Sales and Marketing organisations. Companies that use our Sales Acceleration tools are already finding that they are able to answer a variety of difficult (and often expensive-to-get-wrong) questions: 1. Should I cut low performers or invest in them?

Source: Sales & Marketing Management/American Marketing Association survey of 1,508 executives

Notice that two of the goals fall into the traditional Marketing arena: product launches and brand reinforcement; while three of the goals fall more into the Sales arena: meet quota, sell value, differentiate product. However, when there is common direction among Sales and Marketing, both groups own all goals, enabling the sales force to be best in class performers. Gaining alignment among two traditionally competing camps is no easy task. As Figure 2 shows, there are some pretty dramatic disconnects between Marketing and Sales.

2. How can I get more of my mediocre performers up the learning curve faster? 3. How do I ensure that I don’t lose my best performers? 4. How do we maintain a value sell and not discount by cutting price? 5. How can I better equip my sales force with the marketing tools they need so they’ll spend more time talking to prospects and less time prepping?

Figure 2: The sales and marketing disconnect _ 58% of companies have not formally defined the steps of their selling processes. _ 80% of those companies that have defined their sales processes have not aligned that process with the customer’s buying activities. _ 75% of companies still do not have an effective process for dispersing and managing leads. Most that do have not integrated that process with their sales force’s opportunity management systems. _ 85% of companies do not have an integrated marketing and sales prioritisation and planning process. Source: Fixing the Marketing-Sales Disconnect, Bob Schmonsees. April 2005.

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SALES ACCELERATION Sales Acceleration is Ogilvy’s answer to amplifying the impact of a company’s sales and marketing investments by defining — and then closing — the performance gap that is created by lack of alignment between Marketing and Sales. Early pilots have been encouraging. In one client organisation, we found that mediocre sales performers were able to up their game by modeling the performance of star sales people, resulting in a 50% increase in sales volume on the same expense base. In another case, we found that speeding the buying cycle could leverage conversions by a further 20%. Although the situations were very different, the core contributor to changed performance was better alignment between Marketing and Sales. As the pioneer of 360-degree brand stewardship, Ogilvy has long known that every point of contact helps to build the brand. In fact sales is often the human manifestation of the brand — be it a direct seller, a telesales person or a channel partner who is interacting with a customer or prospect. And yet few marketing initiatives proactively include the strategic education and enablement of the sales organisation.

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Figure 3: The Sales and Marketing dynamic Company / Brand Advertising One to One PR Sales Promotions

Consumer

Activation, Loyalty, CRM

Sales Channel

Company / Brand

Sales Acceleration Channel Performance Improvement

Consumer

Sales Acceleration

Sales Channel

Sales Enablement and Sales Optimisation

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HOW IS THIS DONE? The Sales Acceleration four phased methodology focuses on quantifying the size of the gap, then closing it by: _ Eliminating inefficiencies and aligning sales and marketing efforts. _ Amplifying the performance of sales channels. _ Reducing sales cycles. _ Increasing volume and reducing sales cycles by providing sales leads at the optimum position in customers’ buying cycle. Figure 4 – Sales Acceleration methodology

C-level discovery consulting to help quantify the size and cost of the sales and marketing gap, and to identify where money can be saved or redirected

A series of facilitated workshops to develop a strategy and change management plan to align sales and marketing

PHASE 1 — DISCOVERY: UNDERSTANDING THE SIZE AND THE COST OF THE GAP The size of the sales and marketing gap is unique to every company and as such there is little information available within the companies that quantify it. What’s evident is that most companies are not aware of the size of the gap or, in many cases, that it actually exists. A study by R.L. Polk of 1,329 automotive dealerships conducted over a 15 month period with data from over 1 million leads reported that, “56% of leads result in a sale, however 92% bought from a different dealership, 76% of them bought a different brand and only 24% bought the brand they initially enquired about.” This highlights a need for closer collaboration between marketing and sales throughout the buying cycle. Using our proprietary Strategic Alignment Methodology, we can ascertain the present situation and the potential improvement that can be made. The outputs are: _ The quantification of the sales and marketing gap. _ The level of internal support required for change. _ Impact on the brand and customer experience.

Consulting methodology and programs designed to optimise demand generation and lead nurturing to reduce buying cycles and increase volume

Sales performance improvement strategies and productised solutions designed to improve organisational performance through better enablement of sales and marketing

_ Identification of processes that impede strategic implementation. _ An estimate of the ROI from making the improvements. _ A strategic framework. _ Data to design the alignment strategy.

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PHASE 2 — ALIGNMENT: ALIGNING THE ORGANISATION

PHASE 3 — ENABLEMENT: IMPROVING THE PERFORMANCE OF THE SALES FORCE

The information gathered in the discovery phase allows alignment strategies to be designed. These focus on aligning marketing and sales within a framework that ultimately results in a coordinated go-to-market plan making the most of sales opportunities.

Sales performance strategies are then developed into plans to enable and improve the readiness, capability and performance of the sales force. A combination of bespoke solutions and proprietary products are deployed to leverage the efficacy of sales and marketing.

To achieve this outcome, a series of facilitated workshops are undertaken to develop the strategic framework into a plan with shared KPIs for sales, marketing, operations and management. The expected outcomes are:

These include:

_ Alignment of the stakeholders _ The identification of cost optimisations _ A roadmap with key milestones _ Aligned goals and KPIs

_ Strategic sales programs that connect the marketplace message to the products and services being sold. _ Tools and specific information that enable more of the sales force to perform like their best in class peers. These can be delivered as a portal, a set of web pages situated on a company’s sales intranet. _ Simplified access to the relevant information — from customer needs, through competitor information to objection handling.

_ Message optimisation _ Target and channel optimisations _ Processes that are integrated _ Common technology and databases _ A common understanding of customers’ buying cycles

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_ Marketing material and support that complements sales throughout the buying cycle.

PHASE 4 — ACCELERATE SALES: INCREASING SALES CONVERSIONS

_ Alignment strategies that focus on selling value over price. _ Sales training and a closed-loop feedback process. _ Incentive programmes that are aligned to sales targets and performance improvement.

One of the easiest ways to increase the impact of your marketing investment is to include sales as a key audience for every campaign. By providing your sales force with the information and insights they need to move the conversation from broad market issues to needs to specific products and services, you can speed the buying cycle and improve the overall performance of your marketing investment.

It’s not a sales cycle. It is a buying cycle. And prospects set the pace.

In this phase, we provide nurtured ‘ready to buy’ leads to the sales force. Proprietary demand generation software optimises a database of prospects and customers by using triggers to release leads at the optimum moment in their buying cycle. This process provides the added value of identifying the prospects’ needs to identify the most appropriate solution to be sold or the best customer up-sell or cross-sell opportunities. Processes are put in place to ‘market’ the leads once they are passed to sales, to maximise the conversion. The R.L. Polk study mentioned earlier found that 32% of sales converted within 30 days, with the remaining 68% after 90 days. Dealers who employed rigorous follow-up strategies were able to exploit the opportunity.

We have seen up to 20% improvement in the conversion of sales in dealerships using this process for an automotive company5.

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MEASUREMENT AND OPTIMISATION The process allows for continual optimisation, meaning you can see the difference that Sales Acceleration is making to your business. It also allows for ‘what if ’ scenario planning, a key benefit when making decisions on cutting or investments. Sales Acceleration has been developed to address and optimise the performance of the following areas and by doing so close the Sales and Marketing Gap. _ Investment: Where budgets should be saved and where you can make the best ROI on any investment. _ Target and channel: Who are your best customers and resellers and how they can impact on your sales. _ Message: Aligning your marketing and sales messages for maximum impact. _ Sales Force: Improving the performance of your sales channel. _ Communication: Identifying the most effective communication tools and channels.

COMPANIES BENEFITING FROM SALES ACCELERATION Sales Acceleration is already working for a number of companies. A number of Ogilvy’s multinational clients are currently using parts of this methodology to optimise costs whilst amplifying the performance of their sales and marketing efforts. One of the many advantages of this process is that it does not require a company to start at discovery or end with demand generation. The appropriate point of entry is determined by a company’s current situation. Some organisations may have completed the discovery phase with other consultants and may be looking for implementation, others may have a short-term objective to generate demand or improve performance. WHAT ABOUT TECHNOLOGY? You will have noticed that we have not promoted a technology solution. Sales Acceleration differs from other solutions in the marketplace in that it is not sales force automation, CRM software or a database but a methodology for identifying the size of the Sales and Marketing Gap and closing it.

_ Buying Cycle: Reducing the buying cycle through effective lead and customer management.

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GETTING STARTED You know your company is ready to benefit from Sales Acceleration if you agree with any of the following statements: _ I am planning to make cuts in my sales force, but could do with a more scientific approach to determine how deep they should be. _ Retaining my best sales people is key, especially in the current trading environment. _ I am sure that our company would benefit from closer collaboration between sales and marketing. _ I see our company running marketing campaigns and sales plays — but they’re completely disconnected from each other. _ I know that all customers are not created equal, yet I often find our sales and marketing activities treat them all the same.

REFERENCES 1. Pharma Marketing blog — Fewer sales reps leads to higher costs 2. Face to face interview with pharma rep 3. IDC — CMO research study 4. CSO Insights 2007 Sales performance optimization report 5. OgilvyOne client example — Automotive Acknowledgements Sherri Leopard — Leopard Communications Rowan Jackson — Change Masters International Richard Harris PhD — Change Masters International William Fonvielle — Change Masters International

_ I don’t want sales creating their own sales presentations and promotional material. They usually don’t look good, plus it’s a waste of their valuable time — I’d much rather they were out with prospects and customers. _ Finding an inexpensive way to keep all our sales opportunities nurtured until they are ready is an attractive proposition. _ I see an opportunity to beat my competition in today’s market. Contact us for a free, confidential consultation from which you can get a greater understanding of how Sales Acceleration can help you close your sales and marketing gap.

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For more information please contact: Toni Lee, North America ([email protected]) Paula Bernasconi, Latina ([email protected]) Serge Nicholls, Europe, Middle East/Africa ([email protected]) or Soames Hines, Asia Pacific ([email protected]) 19

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