Design Your Sales Systems – Audio Version
How to design your sales systems for maximum output.
The thrust of this article pertains to designing or re-designing your Sales Systems so that your sales department has clarity for how they need to function not only to increase sales, but also to increase profitability for your company.
This topic has become very relevant lately – especially for Make-To-Order, custom manufacturers, precision manufacturers, technology companies or anyone whose customers rely on them to provide engineering or some other technical expertise. Typically, one of the defining characteristics of these types of operations is the high degree of variability and uncertainty inherent in the solutions design and production phases.
The ideas discussed will relate particularly to manufacturing. However, keep in mind that these principles also apply to anyone that utilizes engineers or technical resources to produce or configure digital products. We do not distinguish between digital products, such as websites or custom software, and tangible products such as molded plastic parts or capital machinery.
For our purposes, the nature of these types of businesses is far more similar than they are different with respect to how the sales organization should be structured.
To wet your appetite for the information to follow, you may want to envision these three points:
Our intention is to help you understand some of what’s currently happening in the revenue generation world of technology and custom manufacturing. This is the current state. You may be able to identify with some of the challenges inherent to the way sales is presently organized in your company.
For the potential future state, we invite you to keep an open mind and consider some things you can try so that you can incorporate effective strategies into your sales department. Our objective is very straight forward. We hope you see something that you can relate to, and apply to your business.
We will draw upon our experiences working with several clients over the past 15 years.
What goes into designing an effective sales effort?
To explain this, we’re going to go in depth regarding the problems, causes and mindsets, of the sub-optimal organizational structure. Let’s start with the main problems companies are facing today with their sales efforts.
According to Enterprise Minnesota’s 2015 report on The State of Manufacturing survey, we are living in times of economic growth; yet manufacturers report that their profits will be at their lowest levels in six years.
Why is this happening?
The reason this is interesting is because of The Prosperity Paradox. During the most recent recession, companies were doing everything they could to hang on to clients and revenue. It was wise to spend carefully. Most of the focus became internal to improve processes and look for ways to cut costs. The reason companies like to focus on continuous improvement in production is because they have a belief that there is little they can do to increase sales during hard times.
During the last five or six years, things have turned around for the better. Revenues are up as a natural consequence of an improving economy. But alarmingly, we’re still seeing flat or diminished profitability. The reason this is alarming is because if all boats rise during high tide and we still cannot take advantage of the cycle, what’s going to happen when the tide starts flowing out again?
Because new customer acquisition and maintaining profit margins is becoming increasingly difficult, one might conclude that we are getting worse at the art and science of selling.
This is not true – at least not in terms of generating revenue. The challenges we see in growth in profitability have more to do with the fact that the rest of the organization (and our competitor’s organizations) are getting better. Better, faster and cheaper production puts a relative strain on the revenue generation side of the business. Excess capacity begs to be utilized – and why not? Every unused resource is an opportunity cost and a potential growth inhibitor.
Perhaps this is a temporary situation and if we work hard enough to improve our companies, eventually profits will start to rebound. Besides, isn’t there a big re-shoring effort due to the increased labor costs in China and other places? Won’t that save our profitability?
Perhaps, but not likely. If you look at the data, reshoring from China and other low-cost labor countries is slow in the making. According to the global consulting and research firm A.T. Kearney Inc., as reported in the Wall Street Journal late 2015, U.S. manufacturing output grew by an average rate of nearly 6% per year as the nation recovered from a steep recession. But U.S. imports of manufactured goods from China and other low-cost Asian countries grew even faster, at an average rate of 8% per year over the same period.
The trend information is working against the projection that reshoring will have a significant impact. Over time, manufacturers all around the world, and the US is no exception, have gotten better and better at making stuff faster and cheaper, and the distribution channels have improved. It’s getting to the point where fewer and fewer companies are constrained solely by their production capacity.
If you think it’s tough now, what do you think it will be like in the future? Automation is coming from every angle. This means manufacturing productivity will increase to levels we have never seen. With the growth of 3D printing, robotics, AI (Artificial Intelligence) and M2M (machine to machine) or IOT (The Internet of Things) just to name a few examples, we are seeing how technology is rapidly improving the capabilities and capacities of a lot of custom manufacturing.
Better manufacturing practices mean more and more capacity.
Today we’ll be talking about how to design your sales department so that it can take advantage of your growing capacities. Why is this important? It may seem obvious in that who doesn’t want their salespeople to be better? But there is another component to this that relates to your customers and the experience they have working with your company.
We will argue that the buying experience is one of the only areas where you can truly differentiate yourself and provide customer value. And it will be this value that your customers can point to for their loyalty and their reason to do business with you. We will refer to this as the overall buying experience. This phrase is inclusive of prospective buyers as well as current customers.
Everyone says they have great engineers, great production equipment, and great quality control systems, maybe you are ISO certified etc., but whether you are in the middle of the supply chain or selling a finished product, the prices you can charge, and thus your margins, are always going to be a concern.
How do you get the message across that you are different than your competition and that those differences are valuable?
A moment ago we eluded to the overall buying experience as the best opportunity to differentiate you from competition and show value. Over time, this has become one of our baseline assertions and assumptions.
If, by contrast, you believe that your customers buy from you primarily because of your patents/intellectual property or some other game changing, curve jumping, face melting innovation, then providing a high quality overall buying experience might not be as important.
Another scenario that has less to do with “overall buying experience” is related to selling as the price leader. If you truly are the low-cost provider, there is a substantial number of people that will be willing to buy from you. The problem with this model is that as soon as you are not the low-cost provider, your customer base will begin to erode.
Our assumption is that most of us don’t have some sort of overt technical superiority that we can fully rely upon, nor are we the low-cost provider.
If you are still reading this, then perhaps you’ve accepted the notion that you have the same or similar production equipment, design software, business software, and overall business tools as your competitors. In fact, you may even be buying your raw materials, inventory and other supplies from the identical vendors.
Furthermore, we assume that it’s becoming increasingly difficult for salespeople to consistently find and create new profitable customers. Think back to the Prosperity Paradox for a moment. Overall revenues are stable or increasing; thus, the real challenge is selling profitably.
If you ask salespeople to identify their biggest barriers – they’ll oftentimes start talking about revenue – and they will talk about not having enough good leads and/or they don’t have the best product offering and/or “Our Prices are Too High.” – Don’t you just love hearing that one?
This is a natural occurrence because sales success is usually measured by revenue; not profitability or overall buying experience. That’s someone else’s problem, right?
A potential dilemma for those of you who may be saying, “wait a minute. Our salespeople are very well equipped and adept at delivering excellent customer experience.” If this is the case, then your problems may have just gotten worse. What you’ve done is labeled someone a salesperson and assigned them the role of account manager. This condition can paradoxically have an adverse effect on sales growth. You’ll hear why a little later when we define the role of sales and salesperson.
If you ask sales management what the barriers are for doing a good job for the company, you might hear a few more descriptors like not having enough training budget, not able to get our salespeople to do enough activity, or not having enough resources to get the right salespeople on board.
Once again, the identifiers for doing a good job are primarily revenue related and not as focused on overall buying experience or profitability.
And although these could be true statements to a greater or lesser degree, one thing that is often overlooked is the inherent flawed assumption about the role and responsibility of the sales department.
The job of the Sales Department.
The job of the sales department is to capture revenue, and to do it in a manner that is profitable for the organization.
Let’s look at some of the specifics of the obstacles mentioned earlier. For sure, it’s rare that you’ll hear about a sales department that has too many good qualified leads. Although we’re not going to talk a lot about how to fix lead generation problems specifically, we will be referring to the topic of lead generation. It’s important to recognize the relationship and challenges with respect to sales and lead generation because it provides clues as to where the extreme inefficiencies exist within your sales efforts.
Not having enough qualified sales opportunities brings on two very nasty problems. First, the cost of customer acquisition skyrockets. Not only in terms of what you are paying your salespeople to do, but also in terms of the opportunity cost of not having enough work flowing through your company. Naturally, you can offset this to some extent by paying salespeople commissions on only what they sell, but there is still always a cost associated with having salespeople not selling enough, and at prices not high enough.
The second problem this can lead to is eroding margins. Because salespeople feel a strong sense of urgency to get out there and sell something, they are more susceptible to discounting and overpromising. This has the undesirable effect of keeping everybody busy but at relatively low margins.
Let’s now create some context for dealing with these challenges.
If you think about sales for a minute in the context of manufacturing and process flow, you can get a clearer sense as to how work is performed and what the expected outcome or productivity should be for each task performed.
Here is a typical lead generation to sales conversion process.
Notice that marketing is responsible for filling up the funnel with prospects that have an early interest. That said, most organizations expect, and in many cases, insist, the salesperson supplement this effort with their own activities. These might include cold calling, asking for referrals or seeking connections on their Linkedin account.
But what is the real job of a salesperson? How should we define the term itself: Salesperson?
We define the main job of a salesperson is to conduct Strategic Results Conversations™ with their prospects and customers.
These words are carefully chosen for a couple of reasons. First, if the nature of the product or service being offered is not perceived as having strategic benefit to the buyer, it begs the question as to whether you need a salesperson involved. Perhaps interactions that don’t yield a strategic insight or decision should be handled somewhere else in the organization.
If an overall buying experience is an important tenant of happy and loyal customers, then any interaction short of providing something of strategic value will potentially detract from the relationship between buyer and salesperson.
Some detractors are obvious…poor service, unmet expectations, poor quality. But some detractors may be subtle…drop in visits by salespeople that interrupt the buyer’s day, unwanted cold calls or solicitations, or providing information that is irrelevant to the customer.
There are two key points worthy of emphasis. Firstly, the responsibility of sales to their company is to capture revenue, and to do it in a manner that is profitable; and secondly, the responsibility of sales to their customer is to differentiate the offers being made and to create a valuable buying experience. The proof that this is happening will be borne out by the existence of profitable and loyal customers.
Notice that we are explicit about the responsibility of a salesperson as creating a valuable overall buying experience, and NOT a valuable customer experience. The reason ties back to an earlier dilemma; you may have labeled someone a salesperson and assigned them the role of account manager. This can be problematic if you want to grow sales. Account Managers are not terribly interested in setting existing customer needs aside so that they can find and create new customers.
With this in mind, let’s share the definition of a salesperson in the context of driving Strategic Results Conversations™.
We define a salesperson as one who creates a condition such that the buyer is inspired to trade something of value for something of greater perceived value.
And the primary tool that a salesperson uses to create this condition is the Strategic Results Conversation™.
Thus, if a salesperson is doing their job, they will be accountable for the quality and quantity of Strategic Results Conversations™.
In the early stages of the sales process, the Strategic Results Conversation™ might lead to the buyer trading their time to learn something. No money changes hands, but certainly the buyer invested something to get something of perceived value – in this case they may be trading time for insights. Another potential outcome of the Strategic Results Conversation™ is a prospect or customer trading commitment for commitment during the sales process. An example of this might be during the final quoting and demonstration phase of the sales process. “I promise to have all of my decision makers in the room if you promise to have all of your decision makers in the room.”
But here is where the job of the salesperson gets a little grey – and where the inefficiencies come to bear. Whose job is it to create access to the people with whom we need to have a Strategic Results Conversation™? Do we need our salespeople involved to facilitate simple transactions or to answer simple questions? Do we need our salespeople involved in technical matters whereby they will necessarily get pulled into engineering, solution design, production or other matters? How involved do we want our salespeople in project management? Should salespeople be creating their own quotes and estimates? Should our salespeople be responsible for collecting overdue invoices?
If you think that some of these functions are the job of the salesperson, you will have baked into your sales design a lot of activities that are fundamentally inefficient.
Let’s return to an earlier notion with respect to the context of manufacturing and workflow processes. Let’s say you have a skilled machine operator whose main responsibility is to make sure the machine is producing 10 widgets per hour – and that each widget produced was extremely profitable relative to all other products offered. Let’s further assume that the machine is complex in that it takes all the operator’s senses and attention to be fully productive.
Now suppose someone in shipping and receiving needs some help packing up a few boxes to ensure that another customer order makes it on the delivery truck by the 3:00 deadline. The obvious thing to do would be to ask our master operator to push the pause button on the machine to help get the other order out by 3:00. Right? Wrong! It would be far better to find someone else to assist with shipping the other order.
Yet, this is exactly what we are doing to our salespeople. They are often some of the highest paid and highest skilled people in our company – and we will fill up their time with low probability prospecting, CRM reporting, inefficient travel, account management, project management and on, without completely thinking through how the job of having Strategic Results Conversations™ are being impacted.
As we think through the example and description of other parts of the organization – we begin to realize that we are applying the principles of Division of Labor to other parts of our company, but not to the sales department.
One of the main concepts that has carried the day for Lean, Theory of Constraints and other continuous improvement programs is the idea of standardized work and specialized work cells. We like to think of our salespeople as being part of a sales team, yet our compensation plans are usually designed to foster internal competition rather than collaboration; individualism rather than collectivism.
The wonders of workflow: A Theoretical Study.
Acme Widget Company Productivity Premise: A woman makes a baby in nine months.
Theory A: If a woman can make a baby in nine months, then by gosh nine women working together should be able to make a baby in one month.
What’s the flaw in this theory? It’s a workflow issue.
No amount of additional shared resources or management intervention will change the productivity. You’ll just have to respect the dwell time it takes to assemble the baby.
The dwell time starts at conception – and no practical application of additional resources will change the bio-physical nature of the workflow.
Theory B: If a woman can make a baby in nine months, then nine women should be able to make nine babies in nine months.
What are the circumstances that would support this theory? This will work, in theory, because the actual assembly of a baby is completely automated. Procurement of raw materials, Quality control, Just-In-Time delivery of parts, climate control, even lunch breaks are automatically scheduled and provided. Once the process has begun, there’s nothing that can be done to accelerate the process or increase production. On the other hand, the dwell time will pretty much take care of the demand for nine babies in nine months.
Now – let’s see how Theory A and Theory B compare in the Sales worlds.
Sales Premise: An average salesperson sells a million dollars of product in nine months.
Sales Theory A: If one salesperson can sell a million dollars of product in nine months, then by gosh nine salespeople working together ought to be able to sell one million dollars of product in one month.
This is an obviously flawed theory. Again, it’s a workflow issue.
The major flaw in the theory is due to the nature of the assembly of a sale. Like making babies, a certain amount of dwell time is necessary for prospects to go through their own decision making and buying process. It seems intuitively obvious that heaping on a bunch of salespeople will not accelerate sales in the short term.
Sales Theory B: If one average salesperson can sell a million dollars of product in nine months, then nine salespeople should be able to sell nine million in nine months.
It’s an interesting theory, and one that many organizations ascribe to. Unfortunately, it’s completely flawed. Here’s why.
First, unlike making a baby, the process of selling is NOT completely automated – not even close. Sales is highly dependent on a variety of tasks and shared resources. Prior to making a sale, the interdependencies between sales, engineering, applications engineering, and design are complex and nuanced. If you ignore or neglect these handoffs, the sale will fall apart almost 100% of the time.
Second, an “average salesperson” is usually derived by misleading information as to what creates “average”. In general, the 80/20 rule is what reflects the average for a sales department. Adding eight more “average” salespeople will most certainly not increase revenue to the expected nine-fold number. Although tempting – we must be careful not to use traditional accounting and finance thinking to engineer our sales department. Traditional forecasts based on averages of historical data will be extraordinarily flawed.
Third, to scale and automate sales, you may spend a lot of money on sales training, or software such as Sales Force Automation (SFA) or Customer Resource management (CRM), or perhaps you’ll invest in recruiters to find you some great sales talent. Although you may see some incremental improvement in some of these areas, it’s nearly impossible to predict with any certainty how the investment will correlate to the scalability of sales.
Fourth, this is the “account manager” dilemma that keeps coming up for many companies. You may think you are hiring salespeople when in fact you are hiring account managers. The finite number of accounts that currently exist at your company cannot be distributed among the new salespeople. That’s why it’s hard to know how much a salesperson is truly capable of selling regardless of their last job because it’s difficult to know how much of their “sales” were existing accounts.
Ultimately, your efforts to test Sales Theory B will fall short and fail to produce a critical ingredient for the assembly of a sale – the Strategic Results Conversation™.
We’ll give some credit to Acme for trying to apply division of labor principles as they attempted to make a baby faster, but one of the big factors being ignored by the widget maker is the lack of control over the process and of the necessary tasks.
Fortunately, our sales departments have a lot of control over the process and don’t necessarily need to be constrained by workflow issues.
Unlike making babies, management intervention will influence the output of sales. The old workflow mentality of more Salespeople implies more sales, is being replaced by better workflow implies more and better sales. We have an opportunity to apply manufacturing principles to significantly increase the sales department’s ability to have more and better Strategic Results Conversations™.
Designing a better mousetrap.
Let’s now turn our attention to the design of the sales department and function. It is important to think about design from this standpoint – let’s think about the design and then fill in with the people.
In the world of graphic design; they use a phrase that is germane. That phrase, “copy informs design, not the other way around”, is kind of like designing a sales department. The business plan and business goals should inform the design, not the other way around. Too often we see an existing sales function and team, and the tendency of leadership is to work with what they have rather than rethinking and redesigning the entire function. It’s one of the reasons why sales training remains so popular in the market. The logic is always the same…let’s teach our people how to be better at what they do.
It’s hard to argue against the general logic of this, but it’s absurd to think small shuffles can fundamentally change a system. If small incremental change is what you are looking for, then sales training might be sufficient. If you’re looking for something a bit bigger in scale, then redesigning the system should be considered.
If you want to get from L.A. to New York City fast and cheap, would you be better off improving the care and feeding of your horses or would it be better to buy an airline ticket?
Because we will be talking about the elements of designing your sales department without knowing your business plans and goals, we’ll have to make a few assumptions along the way.
Assumption 1: You lack sufficient numbers of qualified sales leads across your organization. To compensate for this, you require your salespeople to engage in activities that produce sales leads. (And you might be thinking, “yes, but isn’t that their job?”)
The answer to this might not be obvious. For sure, if you look to traditional sales training, just about all methodologies support the idea that salespeople must be good networkers and have a no-fear attitude about picking up the phone and talking to people. “Get out there and turn over some rocks” might be the directive.
To some extent, this is still true. But from an efficiency and workflow perspective, it’s horrible. There are many sales force automation companies, marketing companies and research firms that claim it can take 6-14 touches before an opportunity turns into a sales ready lead. Presumably, the prospect is not ready to even talk to a salesperson, let alone buy something, until a lot of time and energy has been utilized. Even if we cut those numbers in half to compensate for the bias that a sales force automation company has for overstating those figures, it’s still a sizable investment in time and effort.
Furthermore, you have sales gurus like Jill Konrath www.jillkonrath.com suggesting that salespeople should be contacting prospects “much more often than you think” when contemplating the question, “how often should I contact my prospects?”
She goes on to say, “I suggest you think about sending messages to your clients maybe every three days, every four days…”
Jill Konrath is an experienced and brilliant teacher that has been in this business a long time, and she knows how much effort it takes for salespeople to do their job. But here is the rub – while some of your highest paid people are performing the task of prospecting, your cost of customer acquisition keeps going higher and higher.
A common misconception of the role of sales is that to be effective, salespeople must be proficient at generating their own leads. While lead generation is an admirable skill, it’s impractical to think that you can find sales superstars that can do it all.
If you are paying your salespeople to make hundreds of contacts at the expense of not having a Strategic Results Conversation™, what is the cost/benefit ratio to this trade-off?
What is the proper sales design?
To answer this, you need to bridge the gap between your customer’s desired results and an understanding of your market. Let’s speak a little bit more about how to “bridge” these subjects.
Consider a new mindset.
There are a couple of steps to have a successful sales function.
The First step is to clarify your objectives. Is it to grow revenue? Margins? Both? It’s not good enough just to want more sales. Knowing why you want more sales sheds light on the nature of the types of customers you want to create. What do you want more sales to do? Produce more profit? Increase the salability of your company? Gain more market share to pressure your competition?
Here is a story that relates to having clear objectives. I recall a time Secretary of State Colin Powell was being interviewed by a Sunday news program prior to our country’s involvement in Afghanistan. He was asked if the US should send the military into the country. He said, “Maybe, maybe not. First and foremost, what do you want the military to do? They are really good at logistics, and at taking territory by force, but they aren’t in existence to run a country or provide long-term security so that the people of a given country can live their day to day lives.”
As you design and engineer your sales effort, figure out what you will be asking your salespeople to do and what you are really wanting them to do? Generate leads? Follow-up with current and future customers? Update the CRM database? Create and deliver compelling stories? Perform discovery interviews? Demonstrate the value of your offerings? If the answer is ‘all the above’, you may be in danger of expecting too much like our military in a foreign country.
If you agree that their main objective is to have Strategic Results Conversations™, then it becomes important to identify the tasks that will either support or detract from this objective. Supporting tasks should be encouraged. Detractors should be eliminated or performed in a manner that does not detract from the overall goal of the salesperson. For example, if a drop-in visit interrupts the buyer’s day, what strategic value does this have?
The second step is an analysis of existing structure, discovering where you are strong and getting really clear about the organizational limits.
The third step is to create a visual representation of what an effective sales function will look like.
As you can see in this simple diagram, we start with just a couple of circles. Within each circle are the tasks that need to be performed. At the intersection of the circles are the tasks and information that each department is responsible for knowing or executing. In most cases, the final draft of sales department won’t necessarily have a high number of circles, but there will be a high degree of clarity at the intersection of the circles.
The entirety of this system is referred to as Handoff Selling™.
Case in Point.
Let’s turn our attention to three short case studies. Each example demonstrates a slightly different final engineered concept for their sales department.
The first example is a machine builder in the food industry. They build capital equipment that’s integrated into other new or existing equipment. Even though about 80% of any given machine is made from standard specifications, the complexity and cost of any given project could go through the roof due to the last 20% of customization that’s necessary to complete the project and satisfy the factory acceptance tests.
The priority for the sales department is to get an understanding of the customer’s Value Requirements ™. Without this step, their customer would cite all kinds of modifications that may or may not be important to the final project. “But what the heck, why not just throw it on the estimate because maybe we’ll need it at some point.”
If the salesperson takes the bait, they would run back to their internal estimating department and applications engineers and inquire as to what could be done. In true form, engineers are problem solvers at heart and will look at everything at their disposal to help the customer. Sadly, the clock is running, and the time spent on speculating and innovating and problem-solving is getting expensive – so much so that the customer is not really interested in footing the bill.
How was this ultimately handled? Back to step one… get an understanding of the customer’s Value Requirements ™. From this thinking, we saw a new line of analysis and questions. Any feature that the customer requested was examined from the standpoint of how this was going to add value to the finished product or how it was going to improve the production process. By using a series of very simple matrices, one could quickly see the impact of their modifications relative to the cost. We distinguished a clear line of involvement between sales and applications engineering. The division of tasks and labor was redefined such that the risk of redundant and conflicting information was reduced throughout the sales and production cycle.
Over a fairly short period of time, the salespeople could see that their influence on the Strategic Results Conversation™ not only reduced the time of the decision-making process, but it prevented the engineering department from formulating and bidding on ideas that ultimately would not be viable. Consequently, gross margins increased because there was much better control over engineering resources early in the process.
Now that the client could see the impact of an effective Strategic Results Conversation™, the emphasis shifted to increasing the number of these conversations. Historically, each salesperson was responsible for generating their own leads within a tradeshow environment. Because each salesperson has a different level of product expertise, and because the product lines were very technical in nature, they relied on each other’s knowledge to advance the sales process. In addition, they each had their own sales quota.
This often led to the most knowledgeable salespeople wanting to take the biggest and most technical opportunities; which had the effect of leaving the other salespeople behind in their quota.
By redefining the main goal of a salesperson as having sufficient numbers of Strategic Results Conversations™, this led to having more non-quota technical resources exercising their area of expertise while at the same time increased the overall number of Strategic Results Conversations™ the other salespeople were having. It was no longer the job of the salesperson to provide highly technical information to prospective customers. As a result, the overall compensation for everyone involved stayed about the same, while at the same time the number and quality of sales increased.
In this case, our client enjoyed gains on two fronts. Their overall sales increased, and their overall margins increased. These gains were directly associated with a clear understanding of the division of labor and making sure the right people were executing the right tasks.
The second case is a company that builds websites. As you will recall, we do not distinguish between custom digital products and tangible products. The only real difference is that digital products require no inventory or physical materials – but nearly every aspect of selling, designing, engineering, project management and configuring is the same.
One of the first challenges that needed to be addressed was lead times. Customers were being promised delivery of their new website, but the projects were consistently late. The root cause of this challenge was mostly due to a lack of details being handed off between sales and the technical people that were building the site. Although the sales department had thorough notes attached to the original scope of work at the time the site was sold and scheduled, the site designers and programmers would have many additional detailed questions once the site went into production. Given the time span plus the lack of technical expertise of the sales department, many of these details would be overlooked or processed incorrectly. Naturally, this caused errors and rework. Furthermore, customers were feeling uneasy as to their buying experience as their confidence eroded.
Once again, the division of labor became the leverage point to address this situation. First, all projects sold were immediately paired with the Master Schedule so that firm delivery dates based on available resources were planned well in advance. Second, project scope and details were turned over to a project manager immediately upon acceptance of a sales agreement. This allowed the PM ample time to coordinate with the designers and programmers so that anticipated problems and other questions could be answered prior to production.
Originally, management thought of their biggest challenge as being a capacity constraint. However, by creating a functional master schedule and by effectively dividing the tasks among sales and operations, they were able to improve their turn-around time and increase gross profit margins by 11%.
The third and final example speaks directly to the cost of customer acquisition as it relates to division of labor with respect to lead generation and lead nurturing phase. Like our first case study, about 80% of each machine they built was made from standard specifications. The last 20% of customization that’s necessary to complete the project required the skill and experience of a seasoned and gifted salesperson. It’s worth repeating that a job of a salesperson is to have Strategic Results Conversations™ whereby the prospect ultimately will trade something of value for something of greater value. In this company, it was typical for a salesperson to need 3-5 years of experience to acquire the skills necessary to be successful.
Rather than attempting to train several new salespeople to respond to increasing demand, the company decided to re-define the role of sales and keep their focus stubbornly connected to Strategic Results Conversations™. The job of new hires (sales coordinators) was to make initial contact, ask preliminary questions, provide basic company information, describe the processes used to ensure a successful relationship, inform the prospect of the information that the salesperson – or “engineer” as they were referred to, would need to make their best recommendations, and finally, the sales coordinator’s job was to manage the schedule for the engineer.
Remarkably, three-quarters of the engineer’s time was freed up by NOT having to manage their own schedule and not having to chase down the scheduling of the next step in the sales process.
The overall result of this was an increase of sales of 34% in 90 days. There was much less pressure to train the next engineer while at the time management planted the seed to all sales coordinators that they could work their way over to the engineering role if they wanted to follow this career path… a lucrative career that required years acquired specialized knowledge.
We hope that this article has provided some insight regarding how we can think of the role of sales and salespeople. We don’t expect that all the ideas set forth here are going to be universally accepted, but we’re hoping there are some parts of this that can be applied to your company so that your customers more readily see the value of your work and how you fit in the market. Furthermore, we hope there are some ideas here that will improve the effectiveness of your sales department and at the very least, provide some ideas as to how you can improve profit margins.
To summarize and suggest a few next steps, consider the following:
We talked about the Division of Labor within the sales organization.
Download the Handoff Selling Chart described earlier. This can be used to outline the steps and tasks in your current sales process. List the name of the person responsible next to each task. Estimate how much time each task takes – you can do this in terms of percentage of the total time available or in actual minutes.
The easiest way to get started with this exercise is to focus on the interactions and tasks that occur in a scenario where your prospect has asked for a formal proposal for a specific project. The reason it is easy to start here is that you probably already have a fairly well-established process for this part of the sales cycle.
From there, work the diagram to the left to reveal what happens in the lead generation and lead nurturing part of the process, as well as to the right to reveal the final design, project management and production part of the process.
The purpose of having this chart will give you an outline of your Current State. As you review your current state, ask yourself these questions: 1) Do I have the right person performing this task? 2) How much time does the task take? 3) How much time should the task take? 4) What is the Strategic Value of the task to my company? 5) What is the Strategic Value of the task to the prospect?
After you complete the Current State portion of the Handoff Selling Chart, draft the Future State component. Include some of the following questions in your analysis as you draft the Future State: 1) What are some alternatives to this task? 2) Who else could perform this task? 3) How would the relationship to our customers be impacted by having a different person complete this task? 4) What effect will each task have on the number and quality of Strategic Results Conversations™ that are happening within the company?
Forward thinking companies must remain vigilant so that they don’t fall prey to obsolete methods. Winning organizations will be those that work in the spirit of continuous improvement in their production department as well as keeping long-term sales and marketing strategies top of mind. Let’s make sure we are not vulnerable the next time the manufacturing and economic ocean tide recedes.