The 2020 Mid-Year Economic Update_long

Peak Sales Performance

nearly focused enough on either of these activities. In fact, our research shows that average salespeople spend only six percent of their time prospecting and qualifying potential new customers. And they spend just 19 percent of their time working to understand the needs of customers and prospects, developing solutions and presenting to decision makers.

To overcome this barrier:

  • Reinforce with your salespeople the importance of prospecting, no matter how successful they have become.
  • Make sure your salespeople understand the importance of increasing sales volume from existing customers. They can do this by spending more time learning about their customers' current and future needs.

Barrier No. 3:
Too Little or Too Much Information

Salespeople carry an expanding arsenal of communication technologies designed to help them access and share information with customers and others in the sales/distribution channel. These devices also make it easier for customers and others to quickly contact the salespeople.

But has more communication technology made it easier for salespeople to focus on their primary function: acquiring and keeping customers? Our survey shows that salespeople spend an average of 15 percent of their time searching for information and responding to e-mail and other text messages. While this may not seem like an unusually large amount of time, it represents more than twice the amount of time they spend prospecting for and qualifying potential new customers.

And while today's salespeople are much more connected, they still don't necessarily have the crucial information they need. Salespeople often have difficulty finding basic information, such as demand forecasting data, product availability, pricing, delivery dates and order tracking information.

Almost all problems and mistakes in the sales/distribution channel can be traced to inadequate or inaccurate information. When these problems occur, salespeople are forced to stop selling and find out why the right product did not make it to the right place at the right time with the right paperwork.

To overcome this barrier:

  • Identify the information your salespeople have difficulty accessing, and determine why.
  • Determine whether the information in e-mail and text messages helps salespeople increase sales volume, or if it consumes valuable time.

Barrier No. 4: Outdated Skills
Today's customers are more price-sensitive than ever before. As a result, many manufacturers and distributors have seen their margins become razor-thin.

In this price-focused environment, salespeople must justify ' in terms of dollars and cents ' the economic value customers will derive from their product offer. If salespeople lack this ability, they leave the customer no choice but to view their product as just another commodity.

Without a clear understanding of the true value of your product, customers will demand lower pricing, choose an alternative offer or decide not to purchase at all. The sad reality is that many salespeople cannot justify a higher asking price simply because they don't know how. To find out if this is the case with your sales force, review how many sales during the past six months were taken at a discount or included some form of extra incentive, such as extended terms or a freight allowance.

Salespeople are not to blame. Though manufacturers and distributors provide each salesperson with an average of 57 hours per year of product training, this training generally does not include the selling skills needed to compete in today's price-focused marketplace.

The good news, for those who choose to not compete on price, is that almost every product offer has some economic value above and beyond its asking price. Your salespeople must have the knowledge and skills necessary to respond when customers ask for a lower price.

To overcome this barrier:

  • Define the value proposition you are delivering to customers.
  • Identify and quantify ' in terms of dollars and cents ' the benefit customers derive from this value proposition.
  • Use this information to overcome downward price pressure.

Barrier No. 5: Inability to Execute
The fifth barrier to peak sales performance is perhaps the biggest of them all: an organization's inability to turn great intentions into day-to-day action. Manufacturers and distributors are experts at talking about their plans for improving sales performance.

But at the end of the year, there is usually a large gap between expectations and results delivered. Missed targets are a major source of frustration for both parties.

At the heart of this inability to execute lies a way of thinking called "swinging for the fences." We have an instinctive disdain for slow, deliberate solutions that produce results somewhere in the future. We're biased towards quick fixes, and at many companies, this mentality is further fueled by intense pressure for quarterly results.

Managers prefer to think of sales performance in terms of home runs, big-dollar breakthroughs, mega-mergers or the next world-changing technology. But as the perceived reward increases, so does the risk. Home runs might provide those elusive big sales numbers, but they're rare and unpredictable. When you swing for the fences, you tend to strike out a lot and after a while, you stop swinging altogether because the risk is too great.

In reality, profitable growth comes from giving your salespeople more time to sell, rather than from the all-too-infrequent home run. To achieve profitable growth, the first thing you need to change is your mind-set.

Instead of thinking about growth in terms of mega-results, recognize the value of small projects and ideas that free up your salespeople, one hour at a time. These realistic, manageable improvements can cumulate in growth beyond your wildest expectations.

(The Industrial Performance Group has developed an online calculator where you can see how even small improvements can impact your financial results, based on your yearly revenue and number of salespeople.)

To overcome this barrier:

  • Stop looking for the silver bullet that will give you the elusive home run.
  • Identify which of these Five Common Barriers to Peak Sales Performance are holding back your salespeople.
  • Focus on the little things that you can do, on a day-to-day basis, to free up your salespeople's time.

Recap
Profitable double-digit growth is available to companies that diligently work to overcome these common barriers. A sales force with the right skills, empowered by management to achieve peak performance, can become an even greater asset to your company. To grow your top line and boost your bottom line, help your salespeople get past these barriers to become peak performers. 2006 Industrial Performance Group. All Rights Reserved. Robert Nadeau is the managing principal with the Industrial Performance Group. The firm works with manufacturers, reps and distributors to solve problems, build trust, improve communication and strengthen working relationships. They may be reached at 800-867-2778 or www.indusperfgrp.com.

Related Stories:
Synchronize Your Sales Process

Research by the Industrial Performance Group shows that manufacturers, distributors and independent reps can achieve double-digit sales growth without additional sales and marketing costs. Starting with the premise that salespeople are the only asset companies have that can generate more revenue, the group conducted a survey to find out how companies are using their sales force. Here are action steps to fight five common barriers.

Everyone wants salespeople to be more productive. But if your sales force is already giving 100 percent, how can you possibly expect more? The truth is, your salespeople can do more ' a lot more ' and they won't even have to work longer or harder.

The Industrial Performance Group has identified five common barriers that keep salespeople from achieving peak levels of sales performance. But more importantly, we've also identified what you can do to overcome them…

Profitable growth is high on the agenda for manufacturers and distributors alike. But despite their best intentions ' and the heroic efforts of their salespeople ' companies often find an uncomfortable gap between what they hope to achieve and what they actually accomplish.

Yet research by the Industrial Performance Group shows that manufacturers, distributors and independent reps can easily achieve double-digit growth with low risk and no additional sales and marketing costs. The key lies in overcoming the Five Common Barriers to Peak Sales Performance:

  1. Inefficient and outdated work processes
  2. Lack of focus
  3. Too little or too much information
  4. Outdated skills
  5. Inability to execute

Every year, companies engage in the time-consuming ritual of setting sales goals and profit expectations. When they miss these targets, many revert to the traditional approaches to improving sales performance, such as changing the compensation plan, investing in the latest technology or bringing in a motivational speaker. Others blame the economy, the competition or even their customers for these shortcomings.

To better understand this issue, the Industrial Performance Group took an in-depth look at sales performance by researching how salespeople spend their time. After all, salespeople are the only asset companies have that can go out and generate more revenue. How well was this asset being utilized?

To find the answer, we conducted an online survey of more than 1,100 salespeople from a variety of industries. The results of our survey led us to identify Five Common Barriers to Peak Sales Performance, as well as critical weaknesses with how most companies measure sales performance.

Measuring sales performance
Sales force performance is usually measured in terms of productivity ' the dollars brought in per salesperson compared to the cost of supporting that salesperson. While productivity is important, it does not tell the whole story. In fact, productivity numbers can create a false sense of security by masking ineffective sales force utilization. Your sales productivity might look good, but you have no way of knowing if your salespeople could be doing even better.

To help a sales force reach peak performance, we must look at sales force utilization. Utilization is traditionally associated with tangible assets, such as plants and equipment. It measures what an asset currently produces, compared to what it is capable of producing.

For example, a manufacturer may calculate the optimal tons per day of a plant and compare it to actual output. The difference between these two numbers is called the utilization gap.

By improving utilization, management can close this gap and improve productivity and profitability. This same approach to measurement can ' and should ' be applied to a sales force.

Our research shows that the average salesperson is grossly

underutilized. While salespeople work an average of 50 hours per week, most of their time is consumed by activities that do not generate revenue, including travel and a multitude of administrative tasks.

How should a salesperson's time be used?

Established research gives us a good benchmark for the optimal use of a salesperson's time. Peak sales performers devote 85 percent of their time to specific revenue-generating activities; they use the remaining 15 percent for day-to-day operation and management of their sales territories.

Our survey shows that the average salesperson only spends 42 percent of his or her time on revenue-generating activities ' well below optimal utilization.

Most troubling is that salespeople spend, on average, 22 percent of their time dealing with problems and mistakes, looking for information and expediting orders. To put this in perspective, think of the additional sales volume you could gain if your salespeople spent nearly an additional one-fourth of their time selling.

Manufacturers, distributors and independent reps could achieve double-digit growth with low risk and no additional sales and marketing costs, just by reducing time salespeople spend performing these non-revenue-generating activities.

The solution seems simple: Give salespeople more time to sell, then watch sales and profits climb. Unfortunately, manufacturers and distributors hold their salespeople back in a number of ways. Let's take a closer look at these Five Common Barriers to Peak Sales Performance and, more importantly, the actions you can take to overcome them.

Barrier No. 1:
Inefficient and Outdated Work Processes

All work in the sales/distribution channel is completed through work processes. A work process is a set of tasks that produces an outcome: an order, pick slip, delivery schedule, invoice, etc. A company may perform hundreds of work processes as a product moves from its point of creation to final customers.

But over time, work processes tend to become inefficient and outdated. While conditions change, the process stays the same. Inefficient work processes result in problems, mistakes and unnecessary work.

Our survey reveals that salespeople spend an average of 11 percent of their time dealing with these problems and mistakes.

Some may claim that one of the salesperson's primary roles is to deal with these issues. It's true that, in its own strange way, all that heroic firefighting" can build customer loyalty.

But imagine how much better your sales force's time would be spent if they could build relationships by addressing the customer's own problems, rather than solving problems and mistakes caused by the very company whose products they're trying sell.

To overcome this barrier:

  • Identify the problems and mistakes that regularly occur in your sales/distribution channel.
  • Identify the processes most closely related to these problems and mistakes.
  • Map out these processes, via a flowchart or other method.
  • Get the people close to these processes involved in developing and implementing a solution.

Barrier No. 2: Lack of Focus
Most manufacturers and distributors would agree that a business must grow to remain healthy and viable. Peak sales performers focus like a laser on acquiring new customers, spending 45 percent of their time prospecting. That's right ' 45 percent of their time cold calling, networking and identifying new companies and contacts. They know that no matter how successful they become, they can never stop prospecting.

Peak sales performers also average 30 percent of their time working to understand the needs of customers and prospects, developing solutions and presenting those solutions to decision makers.

Unfortunately, most salespeople are not

About the Author
Leave a Reply

Leave a Comment

Sign Up for the MDM Update Newsletter

The MDM update newsletter is your best source for news and trends in the wholesale distribution industry.

By subscribing, you are agreeing to MDM’s Privacy Policy.

2

articles left

Want more Premium content from MDM?

Subscribe today and get:

  • New issues twice each month
  • Unlimited access to mdm.com, including 10+ years of archived data
  • Current trends analysis, market data and economic updates
  • Discounts on select store products and events

0

articles left

This is your last free article

Subscribe to MDM Premium today and get:

  • Unlimited access to MDM.com
  • 1 year digital subscription, with new issues twice a month
  • Trends analysis, market data and quarterly economic updates
  • Deals on select store products and events

1

article
left

You have one free article remaining

Subscribe to MDM Premium to get unlimited access. Your subscription includes:

  • Two new issues a month
  • Access to 10+ years of archived data on mdm.com
  • Quarterly economic updates, trends analysis and market data
  • Store and event discounts

To continue reading, you must be an MDM Premium subscriber.