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Perspective

May the salesforce be with you
McKinsey experts say that it’s time to prioritise and become value-creators from being target-chasers, by unlocking salesforce productivity

Harsh Chhaparia & Michael Viertler & Jaidit Brar

Unlocking salesforce productivity is one of the surest ways to make a breakthrough on revenue growth. Yet, this is easier said than done, as companies often struggle with their sales organisations. In India, challenges like fragmented channels, huge variation in talent-quality and high attrition rates, make salesforce transformations tougher to execute.

Senior executives often assume that there is limited upside to what they perceive to be replaceable and low-cost resources. This view is obviously myopic. Our experience shows, companies can unlock as much as 25-30% revenue growth by boosting sales productivity, and significant gains can be achieved within six to nine months. Best in class companies can achieve two to three times the efficiency in terms of number of customers/dealers met and more than double the conversion rate.

At the core, successful companies work differently to transform their salesforce from being target-chasers to value-creators for customers.

Geography need not define coverage, potential should

Indian companies often organise their sales forces using the traditional ‘one-executive-per-district’ principle. Though the approach is simple and makes it easy to monitor performance, it fails to differentiate between high-growth and slower-growth markets. The result is that similar effort is expended on markets and customers with vastly differing potential!

Organisations with a better understanding of their markets and customers, lean towards a strategy that allocates people based on the business potential, or the return on investment (RoI) of the salesforce time. Best-in-class companies are using the power of data and analytics to define market potential (both growth opportunities and risks) with granularity, sometimes even to an individual sales outlet and customer level. This becomes the basis for salesforce targets and time allocation.

This approach was implemented by a global PVC pipes player to achieve 1.5x the market growth in India. The company developed a granular assessment of micro-market potential by estimating construction demand (through a combination of 30+ macroeconomic and microeconomic parameters) at micro-market level. It then classified the micro-markets based on attractiveness vs ability to win into core, growth and seed markets. This classification was used to define scientific targets and allocate salesforce executives. As a result, along with market-beating growth, the company could achieve 5-7% price premiums compared to other Tier-I players and reduce its dependency on core markets from 80%+ to less than 45%.

Less is more

Companies in mature markets rely extensively on digital tools to boost sales force productivity, gather market intelligence, and improve performance management. Indian sales leaders would benefit from these outcomes but importing complex and often expensive tools could lead to disappointing results.

Indian companies, which have successfully deployed digital tools, have made sure they are simple, quick to implement (two to three weeks instead of 12-18 months), can work offline in areas with limited connectivity, and eliminate spreadsheet-based reporting.

The trick is to escape getting entangled in the vast amount of data available and pick one to two relatively straightforward use cases to get started.

In a recent case, a large Indian industrial company that was trying to push a new line of products was struggling with tapering sales growth. Sales leaders adopted a simple digital tool that could be used on an entry-level smartphone and, more important, would work offline. Rather than investing in developing a new sales-force app that would take months to create and test, the company deployed a simple sales-force-automation tool within four weeks that did just three things: daily and monthly activity planning, lead-funnel management, and performance management. The tool also allowed managers to track sales-force performance in real time. The impact was outstanding: sales for the segment grew 20x in 18 months, with salesforce productivity increasing by three times within six months of the tool being deployed.

Another example is that of an Indian auto major where customers had inconsistent experience across channels leading to falling sales. As competition intensified, conversion rates needed to grow by at least 30% to keep up. The team applied analytics that showed that 30-45% of initial enquiries at their dealerships had characteristics that led them to convert at 3x the rate of other leads. These ‘high-priority’ leads eventually accounted for almost three-fourths of all confirmed sales. Armed with this information, the company was able to build a real-time predictive algorithm to score all leads, and therefore identify which were more likely to convert! The analytics-driven approach led to a 20% increase in sales, and 40% improvement in sales conversion – well ahead of the targets the company had set.

Engage, not teach

Learning methodologies for sales are fast evolving to focus on specific needs of the individual. Learning is integrated into the salesforce’s daily work and combines coaching, experiential learning, digital and some in-classroom training.

Sales leaders at an Indian pharmaceutical company mapped their sales reps’ daily activities. They found that reps were spending over a third of their time, especially while travelling to meetings, on social media and gaming. The company turned to offer what is now called ‘micro-learning’ — personalised, relevant, and engaging learning delivered in short bursts. They set up a platform that could work both on and offline, and incorporated gamification into learning modules with leader boards, in-play rewards and engaging character storylines.

The results were extraordinary! In the three-month pilot, over 3,100 of the 3,500-strong sales force took up the training. Time spent on the learning platform was an average of 60 minutes per week (more than on social media) and improved their capability scores by 3 percentage points every week.

Change the conversation

Salesforces currently spend most of their time in order collection, communication, payment collection and coordinating supplies. Digital solutions are taking over these activities and therefore, the role of the salesperson needs to change.  Salespeople need to spend their time generating demand and creating value for customers rather than collecting orders.

At a leading cement manufacturer in India, the sales force was constantly complaining about its dealer margins being lower than those of the competition. The company developed a simple tool that provided salespeople with information on the returns on capital employed (ROCE) the dealers were making by doing business with the company. This exercise resulted in insights that surprised both the dealers and the salespeople. Most dealers were making very healthy ROCEs (of at least 25%), driven by the fact that the company had strong brand pull, which allowed dealers to rotate their invested capital faster. This knowledge changed the conversations among the sales force and the dealers: they went from focusing only on dealer margins to finding levers jointly to increase ROCE further.

The opportunity is enormous, and a few searching questions can help evaluate efficiency and effectiveness-

■ Is your salesforce spending at least 80% of its time meeting your priority customers? Do you have full visibility on their time?

■ Is there very high variance between the productivity of your top quartile and bottom quartile sales executives?

■ Is your salesforce spending over 80% of time on order collection/payment collection? How much time is invested in identifying and creating value to the customers (e.g. demand generation)?

Answers should help prioritise actions and to kickstart the journey towards transformation.

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