In our “new” economy, we now more than at any other time in recent business history strive for the highest possible performance from our existing resources. The luxury of inefficiency is behind us.

In the world of sales, executives work tirelessly to find the path that will take their sales team to a higher level of performance – even a higher level of excellence. These executives are bombarded with product options from software and seminars, to get-well training programs, all of which claim to be the “solution” to sales force performance enhancement. Most are offered at a cost of time and capital that make them impractical in the contemporary business environment.

One product in the past few years that has enjoyed explosive popularity is CRM software. It continues to be successfully marketed as the “turn-key solution”, a plug-and-play answer to improved sales force performance. Many now consider CRM software a necessity for any sales organization.

A recent Gartner report states that forty percent of companies are now focused on generating effective customer relationship management (CRM) strategies in order to increase their competitiveness when the economy recovers.

However, nearly every CRM user organization will admit that although the software technically operates as promised, it does not improve bottom line sales performance as expected. In fact, the majority of salespeople whom have had CRM imposed on them by their management, resist its use because they feel they reap little or no benefit from CRM – it does not help them close more opportunities. Many feel that CRM is no more than a means for their manager to keep tabs on what they do with their time. Why is this?

Gartner states that “Process is often an overlooked part of CRM, and in many cases all that CRM technologies have done is taken out old broken processes and made them run more efficiently.”

CRM – necessary but not sufficient. The reality is that there is no such thing as a one-size-fits-all, or an out-of-the-box product that will by itself solve businesses sales objectives. Sales performance is the product – the result of a sales system. A molecular sales system is composed of many components, one of which should be software that supports the overall system and that provides useful and concise information with which salespeople and their managers can make timely intelligent decisions.

The molecular sales system is composed of individual components, each having a specific function and each bound by carefully designed processes. Therefore, the expectation for each component is specific and confined within the framework of the processes by which it is applied. It is the articulation of these components, via their controlling processes, that cause the molecular sales system to produce its results. Ineffective processes therefore produce undesirable results, regardless of the quality or potential of the individual components. A critical component of the molecular sales system is the effective analysis of data that is collected by the CRM system. Effective analysis is not limited to predictions based on historical data, but rather must be based on real time conditions and the capability of processes and resources (system components) to achieve what is expected of them.

Gartner suggests using analytical tools. “Many companies have more information than they know what to do with, and now have the opportunity to put this to good use studying attrition models, looking at the next-most-likely-to-buy models, and figuring out channel usage patterns,” said Gartner. The report goes on to warn companies to bear in mind that customer behavior may change when the economy improves. Gartner also advises firms to study customer processes with a view to creating greater business efficiencies.

Therefore, the molecular sales system, processes, and components must readily adapt to economic conditions and customer behaviors as they occur. Such adaptability is a function and the result of well designed processes that utilize capable components and effective real time analysis.

Do you have a molecular sales system?

Do you know if your sales system architecture and its components are capable?

Posted in Uncategorized | No Comments »

There is an often repeated claim that, in a business that depends on a sales staff to sell its products, 20% of the sales people are responsible for 80% of the annual sales volume. This is formally known as the Pareto principle, which states that; for many events, roughly 80% of the effects come from 20% of the causes. In other words, there are many situations where the vast majority of the measured or observed outcome, whether desirable or undesirable, can be explained or traced back to a relatively few key contributing/causal factors or sources.

Belief in this principle informs how sales managers select and manage their sales force. For example, a natural assumption that tends to spring from a belief in this principle is that only 20% of people have what it takes naturally to produce excellent sales results. Given this assumption, many – and it maybe safe to say that most – sales managers rely on their ability to identify, acquire and keep individuals who fall into this 20%, as their main sales force development strategy. This makes the competition for great sales people very intense, as there aren’t enough of them to fill every sales position on every sales force. The result there fore is that sales forces are generally staffed with a mix of stellar performers, average performers and low performers, despite the best efforts of sales managers to acquire and hold on to only great sales people.

In an attempt to make the most of what they have, some proactive sales managers turn to training and coaching to try to elevate the performance of their sales force. Judging from the number of sales training offerings available, there is a lucrative market for sales force training and development. However, there are a number of factors that combine to undermine the effective pursuit of training and development of individual sales people:

1. It isn’t easy to tell what training will help each individual sales person.
2. It sometimes require a lot of experimentation in order to find the right course for a person
3. The more time spent in training, the less available time remains for actually selling.
4. There is a high rate of turn-over among sales people at the lower end of the performance ladder
5. The cost of training and developing a sales force takes away from profits.
6. Sales managers hate the idea of investing in an individual who is very likely to then leave and go work for someone else.

Even though most managers will agree to the fact that training and development is a key component in creating and maintaining a high producing sales force, from a practical stand point the effectiveness of training as a strategy will have limited reach for many sales departments.

The net result is that 20% of the sales people continue to take home 80% of the sales commission while the other 80% of the sales force look on with envy. Think about that for a minute. If we are to believe in the Pareto Principle, then 80% of the sales people are typically splitting among themselves only a combined 20% of what the top earners are making. The above chart illustrates the situation graphically.

No wonder turnover is so high. And if turnover is high, no wonder the cost of sales recruiting and training is so high. No wonder sales managers eventually come to think that time spent working with new recruits is a waste of time. No wonder otherwise talented individuals stay away from trying their hands in a career in sales.

There is a need for a different belief system to take the place of the 80/20 rule, one that would make it possible for sales managers to gain access to a wider pool of viable candidates, allow training to be more effective, make it possible for new recruits to start earning a decent living much sooner, and through these factors, result in increased sales volume for the sales manager.

Do you agree or disagree? Please send us your feedback.

Posted in Uncategorized | No Comments »

The Theory of Constraints is an established and proven management philosophy. When properly applied it has yielded consistent, dramatic and significant positive results within various types of manufacturing, project management, supply chain management, and other fields. Its success is fundamentally due to its sound foundation of cause and effect logic. This foundation also enables innovation in new fields and new applications of TOC.

Any new application of TOC should function in accordance with the Five Focusing Steps and the four principles of flow described by Dr. Goldratt’s article “Standing on the Shoulders of Giants” presented at the 2007 TOCICO International conference in Las Vegas.

The four principles of flow as applied to various business operations are:

Improving flow (or equivalently lead time) is a primary objective of operations

This should be translated into a practical mechanism that guides the operation when not to produce ((in the case of the sales environment, this translates to – control the number of active opportunities sitting in the funnel on any given day)

Local efficiencies must be abolished

A focusing process to balance flow must be in place

Among the areas showing promise in new applications of TOC is sales—in particular, the application of TOC to the sales process. Of the attempts I have seen to use TOC principles to achieve breakthrough performance in this area, I have been most impressed with a company named Zero to Quota, and their intriguing software product, Attieve.

Attieve breaks down and analyses the sales process, identifying and exploiting the constraint in the system and providing actionable information to help sales people consistently meet quota. In addition it provides reporting and valuable CRM functions, making it a complete tool for the sales manager.

I feel that Attieve successfully applies both the Five Focusing Steps and the four principles of flow. When this conclusion is coupled with the outstanding results achieved so far in South/Central America, where Attieve has the majority of its installed base, it is easy to conclude that in time, it too [Attieve] will come to be seen as a breakthrough solution in the area of sales. I look forward to similar successes in North America and elsewhere.

David Updegrove

Principal, Afinitus Group, LLC

Certified TOC Consultants

Posted in Uncategorized | No Comments »