The sales Function in our Companies!
By Rodolphe Meynier
Engineers have, for decades, worked to structure, optimise, organise, and turn a profit on factories; human resources are increasingly normalised and structured; accounting by definition has been structured for a long time. But what about the function that allows you to fill in the first line of your statemcnt of income, the one that makes your venture possible: sales? Why is this function so often the least well managed?
Let us begin with a small con- textualisation. The company where I work has been helping Quebec’s small businesses now for over 23 years, and we are often confronted with the same reality – our companies do not know how to manage the sales function of their organisations.
A few years ago, competition was less present and demands outweighed supply. In that context, the sales function was more one of representation and order taking. Unfortunately, the market has changed and, unlike other activity fields of the company, the sales function has not evolved to reflect that reality.
Among the explanations offered for how this came to be, we will keep the two which, in our eyes, have had the greatest impact. First, unlike engineers, marketing experts, and others, there are very few university graduates majoring in sales. Secondly, a recent article from the
Harvard Business Review stated that of all North American MBA programmes, only 15 had a sales orientation. Does this imply that sales is not a science? That, as we are often told, “are born salespeople or we aren’t”, and that “sales is in the DNA”? We will see later that, on the contrary, sales is far from being a question of genetics. Our second explanation is that in the majority of cases our Québécois entrepreneurs have technical backgrounds rather than sales backgrounds. They therefore take care of the tech- nical parts of their organisation and leave sales to salespeople. Unfortunately often, these sales- people became salespeople not because they have a sales diploma, but rather by chance or desire. Without structure or training, our salespeople develop their skills via practical experi- ence, through the school of “trial and error”. Those with more organised natures learn from their mistakes and develop, with time, the structure, knowledge, know-how, and self-awareness to succeed. The others, meanwhile, find themselves in the world of improvisation.
What consequence does this have on our companies?
The majority of companies in which we intervene generate the last 5% of their income from more than 40 to 50% of their clients. If we remove this half of their cli- ents, only 5% of sales will be lost. Pushing this analysis further, we realise that companies use more than 25% of their energy (human resources, time, and money) to bring in 5% of sales. In other words, we spend 25% of our effort to work with over 40% of our clients in order to generate the last 5% of our income. In terms of profitability, very few would decide to invest in this equation. To illustrate this reality, 25% of a salesperson’s time is more than one day per week which would be better spent if they stayed home rather than work on companies with which they generate this last 5%.
Salespeople are often left on their own, as we don’t know how to manage them. This is another great reality which we see in our small businesses, which explains in part the aforementioned state of things. We give them a catalogue of products and services, a list of prices, a territory, sales objectives, and 2 to 3 days of technical training on their products. Conclusion – they go knocking on all doors to try to sell what they have to sell. Result – salespeople come back with comments like “we’re too expensive”, “we don’t have the right product”… This doesn’t account for how, with this approach, companies reap all the clients which their competitors don’t want, our famous 40% of clients which generate 5% of our income.
Salespeople are left to their own devices; we hesitate to invest in support tools and work very little towards professional development. We think that simply having a sales force is sufficient to reach our objectives.
Here are a few ideas to reflect on to change this reality.
Structuring a sales force is:
1. Ensuring that the structure is adequate for the market and company objectives.
To reach your income and profitability objectives, your sales department’s structure must be directly linked to your business strategies and the dynamics of the target markets. For this, you must structure the sales department as a function of internal and external parameters.
Examples of parameters:
- Internal: development strategy of territories/ segments; retention or augmentation of market share, or both; client rationalisation; potential of product lines; strengths of your sales team; etc.
- External: potential of covered territory; level of competitiveness; network structure; economic reality; etc.
2. Ensure that your salespeople are doing the right thing when they are in front of your clients.
The results of your sales team are a consequence of its actions. Increasing the level of effectiveness of your sales team’s action is:
- Having a team composed of salespeople with a background that corres- ponds to your company and its target clients;
- Ensuring that salespeople opt for the right actions as a function of the client’s and prospect’s backgrounds in order to get the most out of their potential;
- Establishing collective and individual training programs as a function of backgrounds;
- Maintaining the loyalty of your best salespeople.
3. Ensuring that your sales-people work with the highest-paying clients and highest-potential prospects.
Managing an existing and future client portfolio must be done as a team with the help of clear processes and must not rely uniquely on individual perform- ances of your sales team. This is why a clientele management process must be put in place. The objective is to devote the company’s essential energy to your highest-paying clients and to your prospects with the most potential. The best method to attain your customer loyalty and pros- pecting objectives must be developed. All this must be framed by performance indicators in or- der to ensure that your processes and targets allow you to attain your objectives in income, profitability, and positioning in your markets.