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HVAC
Articles |
Is it Time to Reengineer
Your Sales System?
There was a time, just a few years ago, when a smart
distributor knew how to organize a sales effort. The
conventional wisdom dictated that you hire
"outside" salespeople, assign them to
geographically-defined territories, set up a straight
commission plan, and challenge them to "go forth
and sell a lot." You hired nice guys with some
experience in the business, expected them to learn on
the job, and set them free. As business grew, you just
hired another one and duplicated that approach.
Easy. Simple. This "traditional" approach has
worked well for years. Many distribution businesses are
built, at least in part, on this system.
But the last few years have brought with them radical
change. You know the litany: Growing competition,
increasing rate of change, new channels of distribution,
increasingly sophisticated customer expectations,
mergers and consolidations at every level of the
business, new strategies and demands by manufacturers,
pressures on margins - too much to do and not enough
time to do it. The world surrounding your business is
dramatically different than it was when you first
created your sales approach.
All that means is that it may be time to question the
way in which your sales efforts are organized.
In order to think clearly about this, it's necessary to
understand a concept - "sales systems."
According to the dictionary, a system is "an
orderly, interconnected, complex arrangement of
parts." You have a number of systems in your
business. For example, you have a system for receiving
and processing a purchase order. That system involves
certain processes, certain equipment (like computers,
printers, etc.) certain people, and a number of policies
and procedures. It's easy to understand that particular
combination of people, resources, and processes as a
system. In the same way, it's easy to understand the way
in which you receive inventory, pick and ship an order,
create and collect an invoice, etc., as various systems.
Your business would not exist were it not for effective
and efficient systems to handle these important
functions of your business.
Now, think of the way in which you create a customer and
acquire an order as a system also. That system has been
simple in the past. You followed the approach discussed
above. You just hired a salesperson and expected him to
do it. That's the equivalent of hiring a customer
service person and charging them with the task of
receiving and managing orders without providing any
other pieces of the system. You wouldn't think of doing
that. You'd made sure you have the best computer system
at his disposal, clearly defined expectations and
procedures, and a set of effective resources for him to
use - all elements of the customer service system.
You've probably been personally involved in the
development and refinement of those and other systems in
your business, understanding that your business's
success depends on the effectiveness and efficiency of
your systems. Now it's time to become just as
sophisticated in your sales system.
Your sales system consists of these elements: purpose,
people, processes, and paraphernalia. The purpose is to
acquire orders as well as to expand the relationship
with customers of various types. The people are not only
the outside salespeople, but everyone involved in
helping to acquire orders and grow customers. So your
customer service or inside salespeople, as well as your
technical service people, sales managers, and yourself
are all part of your sales system. The ways in which you
identify, approach, understand, present to and service a
customer are primarily the processes. The paraphernalia
refers to the tools used in this process: the brochures,
computers, call reports, telephone scripts, etc., that
go into the process. Put all this together, and it
becomes a sales "system" - "an orderly,
interconnected, complex arrangement of parts."
The first step in becoming more effective in your sales
efforts is to understand that you don't just have
salespeople, you have a sales system.
Now, when you reengineer your sales efforts, you
reconfigure elements of your company in order to create a
system that more effectively and efficiently acquires
orders and creates customers.
Most distributors who have reconfigured their sales
systems end up with a system composed of a combination
of many of the following elements:
- a set of highly specific job descriptions and
expectations for a number of different kinds of
salespeople
- a well-defined role for customer service
- a concentrated and targeted direct mail/fax/email
marketing campaign
- a contact management software system
- a highly specific list of targeted accounts
- a highly visible sales role for the company's
executives
- a set of specific expectations and measurements
for the system
- a database of customer information that enables
the company to make informed marketing and sales
decisions
- a variety of sales methods tailored to different
market segments.
Compare this with the simple, old days of one person/one
territory, and you have an idea of what your
organization may look like after you have finished your
reengineering process.
There are a number of compelling reasons to consider
reengineering your sales system. Money is probably the
strongest. Carefully examine your P&L statement.
You'll note that sales force compensation is the largest
single deduction from gross profit, far outdistancing
anything that is a close second. In most distributors,
sales force costs approximate 30% of gross margin. The
distribution executive in search of costs to cut and
productivity to improve would do well to look first at
the sales force. It could be that your current sales
efforts aren't as effective or productive as they could
be.
If you're concerned about the future of your business,
and worried about reducing costs so that you can operate
profitably in light of those steadily shrinking margins,
doesn't it make sense to look closely at that portion of
your business that represents your single largest cost
category? Of course it does.
Next there's the issue of productivity. Your are
probably on your third generation computer system.
You've streamlined your inventory and warehouse
operations, learned how to pick an order with fewer
errors and less cost than ever, figured our how to
process a P.O. ever more efficiently, have cleaned up
your receivables and invested in relationships with your
key manufacturers. But in all of this, you probably have
done very little to improve the productivity of your
sales force. In all likelihood, your salespeople are
doing the same thing today, in the same way, that they
did five years ago. For most distributors, the operant
rule has been, "Hands off the sales force." As
a result, you probably have not had productivity
improvements among the sales force that compare
favorably to other areas of your business. Maybe it's
time to scrutinize that part of your business.
Then there are the customers. Customers are expecting
both more and less from distributors. They are expecting
more service, quicker response, more knowledge and more
information. At the same time, they have less time to
spend with salespeople. If your salespeople have not
adjusted to these changes in your customers, and are
continuing to do business the way they did a few years
ago, it's likely that your current sales system doesn't
adequately meet your customer's needs.
Let's not forget about the strategic reasons to
reengineer your sales system. From my vantage point, I
see more and more manufacturers who are reshaping their
distribution strategies and channels, and expecting
their distributors to help implement those new
strategies. But, too often, the distributors are unable
to accomplish the manufacturer's strategy because their
sales force is unable or unwilling to implement their
bosses' commitments. The manufacturer-distributor
relationship is jeopardized as a result.
On the other hand, a number of perceptive manufacturers
are looking for genuine and concentrated sales efforts
for their product lines as well as ways to cut their
costs. The distributor sales system which can provide
the sales power for manufacturers will be a highly
prized organization. One of my distributor clients
successfully grabbed this opportunity by working very
closely with their primary supplier to streamline the
combined sales system. As a result, the supplier's sales
force was reduced from 59 to 16 people, and the
distributor was far more important to that supplier.
It's likely that your sales system isn't up to this
emerging challenge.
Unfortunately, too often the sales force is undependable
when it comes to carrying out the distributor's
strategic plan. More and more distributors, seeing the
value of creative a strategic plan, are developing
initiatives and priorities designed to guide them
through these turbulent days to success at the end of
the tunnel. However well-conceived these initiatives may
be, they are often stymied at the point of
implementation by a sales system that is a vestige of
the past. It's difficult to implement a strategy that
demands sales calls on new niche customers when the
sales force is content to visit with old friends at
established accounts.
Here's one final reason to consider a dramatic
reconfiguration of your sales system. Technology has
produced opportunities to dramatically increase
productivity. There are a multitude of technology
advancements that can be used to streamline sales
systems. Fax on demand, Internet web pages, intra-net
networks for customers, sales force contact management
programs - these are just some of the more dramatic
tools developed in recent years. Forbes Magazine
recently ran an article that reported that in
circumstances where contact management software was
successfully implemented, sales force productivity rose
between 10 and 40%. Distributor sales systems which make
use of these new technologies bypass their less
sophisticated competitors like a Ferrari passing an
Escort.
All this means that it is a new day for sales efforts.
The distributors who rely on the simple systems of the
past will be left in the wake of those who are
streamlining their systems. Now is the time to
reengineer your sales system.
About Dave Kahle, The Growth Coach®:
Dave Kahle is a consultant and trainer who helps his
clients increase their sales and improve their sales
productivity. He speaks from real world experience,
having been the number one salesperson in the country
for two companies in two distinct industries. Dave has
trained thousands of salespeople to be more successful
in the Information Age economy. He's the author of over
1,000 articles, a monthly ezine, and six books
including: 10
Secrets of Time Management for Salespeople and Transforming
Your Sales Force for the 21st Century. He has a
gift for creating powerful training events that get
audiences thinking differently about sales.
His "Thinking About Sales" Ezine features
content-filled motivating articles, practical tips for
immediate improvements, useful resources and helpful
tips to help increase sales. Join for NOTHING on-line at
www.davekahle.com/mailinglist.htm.
You can reach Dave at:
The DaCo Corporation
3736 West River Drive
Comstock Park, MI 49321
Phone: 800-331-1287 / 616-451-9377
Fax: 616-451-9412
info@davekahle.com
www.davekahle.com
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