An integrated unique approach to improve sales performance

With the beginning of 2013, companies are refocusing their attention towards sales growth. And to elaborate on the debate concluded from the previous article “We Don’t Do Sales Training”, many tend to focus on building models that focus on developing personalities, skills and behaviors of salespeople.
The real challenge is in creating a model that establishes what makes some people better at sales than others—and then supports the replication of those characteristics across the entire sales force.

Below is a unique model, best characterized as “Formulating Sales Toward Transformation”, that would give some directions on how sales could be formulated.  This article is an attempt on narrating the formulas of sales, and how applying science on a sample case study with some given constraints would lead towards sales transformation.

Case Study: Given
Sales Model: Local through direct sales, size: 7 salespeople, design: segmented by areas
The Middle East region is covered through channels supervised by a business development manager (not to be included in the study).
Sales Productivity:
10 meeting / week on average
Highest #: 18 meetings
lowest #: 7 meetings
Sales Process: is based on 4 phases (Call → Meeting → Offer → Closing )
Conversion Rate: is 23% to move from every sales phase to another within the sales process
Sales cycle average: 2 weeks
Average Deal: 1100$
Set Total Target / month = 35,000$ => target per salesperson = 35,000$/7 = 5,000$ /month

It would be best described like an iceberg. Looking at the surface of water or even digging one layer down would be difficult to judge the major issue(s). The shapes of the underwater portion, the real challenges, are the areas that are required to be intensively analyzed. But what’s clear meanwhile:

  1. Company is not meeting their overall objectives with too many roller-coaster sales performance.
  2. Many salespeople aren’t pulling their weight: On average, the  top 20 percent of the sales force generates 62 percent of a company’s revenue, and 51 percent of sales people failed to meet their quotas.

Identify: Define and Analyze
Whether you are examining the entire process or only part of it. Start by defining the problem and the process precisely, clarifying the  issues, evaluating the potential gains, and building the various hypotheses.
Sales turnover in a direct sales channel could be best formulated as:
Sales = Salesforce size X Productivity X Average Deal
Salesforce size = (# of clients required/year X % of Reach X # of optimal hours required/client)
Total # of hours provided/ salesperson /year
Productivity = # of Visits/week X % of Reach
For FMCG companies, or any distributional cases, constraints in the salesforce size equation should be deeply analyzed.
# of Visits = # of Leads X % approached X Conversion Rate
10 = # of Leads (100%) x (23%)
⇒ 44 is the # of lead that are being contacted on a weekly basis in this case.
% of Reach =  Conversion Rate ^ (# of phases in the sales process)
In this case, there are 3 phases starting from the meeting ⇒ % of Reach = 23%^3 = 5.29%
Sales/month = 7 x ((10×4) x (5.29%) x 1100$) = 7x 2,327.6$ = 16,293.2$/month
Thus 46.55% (16,293.2/35,000) increase in sales is achieved on average.
Solution: Sales Transformation
As defined, the 1st step in sales optimization is to identify and categorize the available factors:
Increase Number of Visits: # of Visits = # of Leads X % approached X Conversion Rate

Leads: Sales cycle always starts by generating leads, irrespective of how.

  • # of Leads: Calculate the required # of Leads to be generated on a bi-weekly basis and set a targeted objective for salespeople.

Setting 65 Leads instead of 44 to be approached weekly would increase your sales by 50%. How: 65 Leads would generate 15 meetings/week as per the formulas stated above. The later would lead to 3.174 deal/month x1100$ = 3491.4$ as target/ salesperson based on the given conversion rate.

Conclusion: Target achieved, peaks and valleys are minimized.

  • Potential Leads: Build a systematic way to generate more organic leads and reduce sales admin work, those leads have higher conversion rate in practice too.
  • Referrals: they have a higher % of reach. Increasing referrals by 20% would lead to a 40% increase in sales.

ex: given referrals have a conversation rate of 40% ( 16% reach) instead of 5.29%

⇒ (10 meetings x 4 weeks x 20%) X (16%) X 1100$ average Deal = 1408$ – 465$ original sales = 943$ which is 40% increase in sales. Thus:

  1. Design the sales structure to increase referrals: very focused areas might be addressed by salespeople within such an industry.
  2. Build a process to constantly ask for referrals

% approached: few points to look after:

  • develop a process to contact again turned down leads.
  • drop off non potential leads in order to keep the (%) high.
  • set constant objectives for calls to be contacted /week / salesperson.

Conversion Rate: few points to look after:

  • develop sales people calling capabilities
  • develop a structure for approaching clients and verification whom to contact
  • develop a calling guideline to ease the process
% of Reach: A main factor that most people evaluate salespeople accordingly. This factor could be increase scientifically aside from a tailored development program by:

Design Customer Segmentation:

  • Direct Salespeople on potential customers
  • Allocate salespeople relevant to customer segmentation

Develop a Sales Process:

  • Reduce sales cycle: a simple step when developed properly could eliminate duplicates.

every single step eliminated in the sales cycle would increase the % of Reach by 42.9% (1/Conversion Rate). Thus new % of Reach is 7.56%. So Sales = 7x (40 X 7.56% x 1100$) = 7×3,326$ = 23,284$.

  • Build a standardized sales process with relevant capabilities required for each step
  • Prioritize steps
  • Break the sales process in blocks

Focus on Targeted Offering

  • Eliminate non potential products
  • Direct sales people on potential products relevant to customer segmentation
Increase Average Deal: best appraoched by:
  1. Building a structured sales process that aid salespeople to identify clients’ requirements in order to act as a solution provider rather than a product oriented sales.
  2. Developing sales people up-selling capabilities through a tailored development program
  3. Optimizing prices
Optimizing any of the above constraints was enough to increase overall sales performance by at least 40%. An exercise that only requires deep analysis, proper planning, and discipline of execution.
Companies overall continue to struggle to determine which levers to pull to improve the performance of their sales forces. Many companies struggle with hiring the right sales people, have a large percentage of sales people who do not make their quota, and experience significant attrition of sales people each year.
But what is obvious and could not be denied anymore is the importance, potential and the necessity of putting science into practice in order to take advantage of growth opportunities in today’s challenging economy.
How can we help
With our unique analytical scientific approach to sales, HEED help companies to deeply understand their sales problems, challenges, or their potential opportunity. We then formulate those insights into a laser focused sales strategy, structured sales process and optimized productivity. In doing so, we enable companies to transform sales organization and build a scalable predictable sales forecasts.
Our engagements focus on addressing the strategic level, the sales process, and the productivity level. Our efforts normally range from an intensive duration of five to eight months for a medium-sized firm, including executing the set plan that link together people, strategy, plans and processes.

For further information, please contact us, or simply reply to Meanwhile I would like to invite you to visit our website