Building Winning Sales Force.pdf - Building a Winning Sales Force Powerful Strategies for Driving High Performance Andris A Zoltners Prabhakant Sinha

Building Winning Sales Force.pdf - Building a Winning Sales...

This preview shows page 1 out of 497 pages.

You've reached the end of your free preview.

Want to read all 497 pages?

Unformatted text preview: Building a Winning Sales Force Powerful Strategies for Driving High Performance Andris A. Zoltners Prabhakant Sinha Sally E. Lorimer American Management Association NEW YORK ▲ ATLANTA ▲ BRUSSELS ▲ CHICAGO ▲ MEXICO CITY ▲ SAN FRANCISCO ▲ SHANGHAI ▲ TOKYO ▲ TORONTO ▲ WASHINGTON, D.C. Special discounts on bulk quantities of AMACOM books are available to corporations, professional associations, and other organizations. For details, contact Special Sales Department, AMACOM, a division of American Management Association, 1601 Broadway, New York, NY 10019. Tel.: 212-903-8316. Fax: 212-903-8083. Web site: This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is sold with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. Library of Congress Cataloging-in-Publication Data Zoltners, Andris A. Building a winning sales force : powerful strategies for driving high performance / Andris A. Zoltners, Prabhakant Sinha, Sally E. Lorimer. p. cm. Includes index. ISBN-13: 978-0-8144-1040-0 ISBN-10: 0-8144-1040-5 1. Sales management. 2. Sales personnel. I. Sinha, Prabhakant. II. Lorimer, Sally E. III. Title. HF5438.4.Z648 2009 658.8’102—dc22 2008049520 © 2009 Andris A. Zoltners Prabhakant Sinha Sally E. Lorimer All rights reserved. Printed in the United States of America. This publication may not be reproduced, stored in a retrieval system, or transmitted in whole or in part, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of AMACOM, a division of American Management Association, 1601 Broadway, New York, NY 10019. Printing number 10 9 8 7 6 5 4 3 2 1 Contents PART 1 A Blueprint for Sales Force Excellence 1 1 The Dimensions and Drivers of a Winning Sales Force 2 Achieving Sales Force Excellence 3 23 PART 2 Improving the Top Sales Effectiveness Drivers 3 Sales Strategies That Win with Customers 47 49 4 Sizing Your Sales Force for Long-Term Success 61 5 Structuring Your Sales Force for Efficiency and Effectiveness 6 Designing Sales Territories for Maximum Success 115 7 Sales Force Recruiting: Winning the War for Talent 129 8 Developing More Effective Training Programs 147 9 How to Create a Winning Sales Force Culture 171 10 The Right Sales Manager: A Key to Sales Force Success 11 Using Information Technology to Enhance Sales 12 How Sales Force Incentives Can Drive Results iii 223 247 199 91 iv Building a Winning Sales Force 13 Setting Fair and Realistic Goals to Motivate Your Sales Force 14 Staying on Track Through Better Sales Force Performance Management 305 PART 3 Addressing Common and Challenging Sales Management Issues 321 15 Preventing Sales Force Complacency: The Silent Killer of Sales Effectiveness 323 16 Adapting a Sales Strategy to Meet New Challenges 17 Allocating Sales Resources to Maximize Results 18 Retaining Successful Salespeople 347 367 395 19 Achieving Better Sales and Marketing Alignment 421 20 The GE Story: Improving Sales Force Effectiveness Across Businesses 455 Index 477 287 Preface The sales function is front and center in the challenge to meet or exceed business growth objectives. Sales force effectiveness is a critical success factor, as sales leaders are challenged to respond to events within their companies, their markets, and their environment, while at the same time, striving to continuously improve sales force performance. We wrote Building a Winning Sales Force: Powerful Strategies for Driving High Performance to provide current and aspiring sales leaders with innovative yet practical strategies for dealing with their most critical and frequently faced sales force challenges and opportunities. The book lays out an actionable and relevant blueprint for building and sustaining sales force success in any business environment. It is designed to help you assess how good your sales organization really is, identify current and future sales force improvement opportunities that have large bottomline impact, and implement tools and processes that immediately enhance sales effectiveness. Drawing on our experience consulting with companies all over the world, we strive to make complex and elusive concepts easy to understand and to provide ideas that can be implemented right away to address challenges and opportunities such as: • Creating a winning sales organization by aligning the sales system around company goals and strategies to drive results. • Developing sales strategies that demonstrate value to customers and create competitive advantage. v vi Building a Winning Sales Force • Sizing, structuring, and aligning the sales organization to effectively and efficiently realize market opportunity and drive long-term success. • Attracting and retaining talented salespeople by developing worldclass recruiting processes and building a sales culture that nurtures learning and development. • Arming salespeople with the tools and information they need to meet customer needs and achieve company sales goals. • Developing sales compensation programs that motivate high levels of sales effort. • Setting territory-level goals that are fair, realistic, and motivational and managing sales force performance so that goals are consistently achieved. • Preventing sales force complacency – a silent killer of sales effectiveness. • Implementing sales strategy changes as markets and company strategies evolve. • Ensuring that sales resources are deployed to the right customers, products, and selling activities. • Integrating sales and marketing strategies to create a successful customer-facing organization. • Using analytic tools and structured processes to constantly identify sales force improvement opportunities and enhance sales effectiveness. Kash Rangan, our colleague and friend at the Harvard Business School, sums up the book’s contribution when he writes: This terrific book achieves the rare feat of providing robust frameworks for addressing the most important problems facing the sales forces of today. It has rigor and relevance rolled into one. The book brings a masterful combination of highly practical insights gained from hundreds of industry applications with the sophistication of decades of academic thinking and writing. It lays out the blueprint for achieving excellence, presents lucid frameworks for tackling the core issues of how to size and Preface vii structure a sales force, provides deep insights on how to manage the human side (sales force recruiting, motivating, and compensating), and provides advice on how to mold the sales force organization into a dynamic customer-centric unit. Underpinning the key ideas is breakthrough thinking on some of the most difficult issues facing the $800 billion industry. We have written several books before this one, including The Complete Guide to Accelerating Sales Force Performance (Amacom Books, 2001), Sales Force Design for Strategic Advantage (Palgrave/Macmillan, 2004), and The Complete Guide to Sales Force Incentive Compensation: How to Design and Implement Plans that Work (Amacom Books, 2006). These books have been mostly reference books. Bestselling author Neil Rackham shared with us: “They are the best sales management books out there, but they are a serious read.” With Building a Winning Sales Force: Powerful Strategies for Driving High Performance, we aim to capture the attention of sales leaders, engaging them through an array of deep yet practical insights on what works when running a selling organization. Kash Rangan observes, “The book is organized into short, crisp chapters and concepts are illustrated clearly through stories and a broad range of examples.” For readers who desire greater detail, our reference books are a complement to this book. How the Book is Organized Building a Winning Sales Force: Powerful Strategies for Driving High Performance includes twenty chapters organized into three major parts. • Part 1 – A Blueprint for Sales Force Excellence – organizes the components and complexities of the Sales System into a framework that shows sales leaders how the decisions, processes, systems, and programs that they are accountable for (called the sales effectiveness drivers) influence salespeople, their activities, and ultimately customer and company results. By managing the sales effectiveness drivers well, sales leaders can build a high-quality sales force that engages in the right selling activities to meet customer needs and achieve company financial goals. viii Building a Winning Sales Force • Part 2 – Improving the Top Sales Effectiveness Drivers – presents strategic frameworks, case studies, and real-world analyses showing sales leaders how to get maximum impact from the top 12 sales effectiveness drivers — sales strategy, sales force sizing, sales force structure and roles, sales territory design, recruiting, learning and development, culture, the sales manager, leveraging information, compensation and incentives, territory-level goal setting, and performance management. • Part 3 – Addressing Common and Challenging Sales Management Issues – helps sales leaders use the sales effectiveness drivers to create solutions for important sales force issues. The issues include those that we hear about frequently and consistently from sales leaders — preventing sales force complacency, changing the sales strategy, allocating sales resources profitably across customers, products, and selling activities, retaining successful salespeople, managing tensions between sales and marketing, and establishing successful programs for continuously enhancing sales effectiveness. Readers who desire a complete look at how to build and sustain a winning sales force can read all the chapters sequentially. Other readers who are looking to solve a particular issue or concern can start by reading Part I. Then, they can jump directly to the chapters most relevant to their needs, guided by the diagnostic process suggested in Chapter 2. Acknowledgments This book is a collaborative effort between numerous individuals, including our university colleagues and students, our consulting clients, and the talented staff at ZS Associates. We are grateful to Northwestern University’s Kellogg School of Management for providing a fertile environment for ideas to flourish. Thousands of executives have participated in our Executive Education and MBA Programs at Kellogg and more recently, at the Indian School of Business. Our classroom interactions with these individuals have been invaluable for turning our theories and frameworks into practical sales force management tools. We would like to thank all our colleagues at Northwestern and elsewhere who have supported us academically and as friends. As consultants, we have worked personally with executives, sales managers, and salespeople at over 400 companies all over the world. The clients of ZS Associates have helped us discover, develop, test, and refine many of the concepts described in the book. Because of confidentiality, many of the people and companies must remain anonymous, but we owe a great deal of gratitude to all those who have used their experience, creativity, judgment, and guidance to help us develop and enhance our ideas. Special contributions from ZS clients came from Jeff Foland (United Airlines), Jay Graf (Guidant), Chris Hartman (Boston Scientific Corporation), Quinton Oswald (Genentech), and Gregory Schofield (Novartis). In addition, we are grateful for the input of a firstix x Building a Winning Sales Force class sales effectiveness team at GE led by Kevin Decker (GE Corporate) and including Trish Anderson (GE Commercial Finance Enterprise Client Group), Dean DeStazio (GE Healthcare Financial Services), Yvan Giroud (GE Trailer Fleet Services), Michael Pindell (GE Capital Solutions), and Aileen Sheppard (GE Trailer Fleet Services). We would also like to thank the people of ZS Associates, the consulting firm that we founded in 1983. ZS Associates today has more than 1,000 employees with 17 offices in 9 countries. ZS employs some of the finest consultants and businesspeople in the world, and those people have contributed to the book immensely by contributing ideas and evaluating our frameworks based on their creativity and practical knowledge of what works in the real world. Special contributions came from the following people: Chad Albrecht, Angela Bakker-Lee, Julie Billingsley, Jason Brown, Sandra Forero, Shelley Gabel, Kevin Josephson, Pratap Khedkar, Mike Moorman, Marissa Paine Saluja, Stephen Redden, Ladd Ruddell, Braden Rudolph, Arun Shastri, Scott Shimamoto, Scott Sims, Nancy Smith, Marshall Solem, and Kelly Tousi. We were very fortunate to have several research and editorial assistants working with us on this project. Mary Henske (ZS Associates) helped us gather information and reviewed every chapter for clarity and content, suggesting revisions based on her extensive business knowledge. Linda Kluver (ZS Associates) applied her careful attention to detail to review the entire manuscript for consistency and clarity and to develop the book’s more than 175 illustrations. Ramya Balasubramanian, Sugandha Khandelwal, Pria Sinha, and Krupali Thapar were our outstanding research team. Through their dedication and creativity, they uncovered many of the examples used throughout the book. Greg Zoltners researched and developed content as a coauthor of one of our earlier books. Thank you to all of these fine collaborators who helped to improve the quality of this book substantially. P A R T 1 A Blueprint for Sales Force Excellence This page intentionally left blank C H A P T E R 1 The Dimensions and Drivers of a Winning Sales Force T he sales force is a powerful driver of revenues, and because salespeople are entrusted with a company’s most important asset—its relationship with its customers—they have a significant and often determining impact on an organization’s success. Cisco, Microsoft, IBM, and Oracle each have over 11,000 salespeople in the United States. Pfizer, Johnson & Johnson, and GlaxoSmithKline each have more than 7,000. These seven companies spend a total of over $20 billion a year on their sales forces. The amount invested across all U.S. companies exceeds $800 billion, close to three times the amount of money spent on advertising. On average, companies invest about 10 percent of their annual revenues in their sales forces. Because of the high cost of maintaining a sales force and because sales are directly linked to profitability, most companies take an active interest in maximizing sales force effectiveness, setting up initiatives with titles like “Sales Force Effectiveness Review—Winning for the Customer,” “Global Sales Force Effectiveness Benchmarking,” and “Sales Effectiveness and Growth Initiative.” In many companies, a full-time employee with a title like “Director of Sales Effectiveness” manages a 3 4 Building a Winning Sales Force team responsible for improving the competence and productivity of the company’s salespeople. Practically every company can dramatically improve its sales revenues by implementing the right effectiveness initiatives. In our interactions with corporate sales leaders and executives, we often see revenue increases of at least 10 percent. But discovering the best way to enhance the workings of the sales force is not easy. “Increasing sales force effectiveness” has different meanings for different stakeholders. A vice president of sales might see it as “providing value to the customer beyond the product itself by changing the sales process from transactional to consultative.” A sales compensation analyst might view it as “increasing sales force morale and motivation through better incentive compensation programs.” A sales training manager might see increased effectiveness as involving “increasing salesperson competency through innovative training programs.” A finance manager might view it as “increasing sales per salesperson” or “holding sales force costs below a benchmark percentage of sales.” Individual sales leaders typically struggle to define what sales force effectiveness means for their companies, and to determine how to make improvements that will have a substantial positive bottom-line impact. With this book, we hope to make that struggle a little easier as we lay out—with in-depth discussion, real-world examples, and graphics—the basic principles of how to build a winning sales force. The Sales System: Dimensions of a Winning Sales Force At the beginning of the course we teach at Northwestern University’s Kellogg School and other venues, called “Accelerating Sales Force Performance,” we ask the sales leaders in attendance a simple question: “How do you know when you have a successful sales organization?” Their answers, both spontaneous and reflective, span a wide range of topics but generally fall into five dimensions of sales effectiveness. The Five Dimensions of Sales Organization Success The first responses are usually predictable and focus on company results. Examples include: Company Results The Dimensions and Drivers of a Winning Sales Force 5 • Our sales, market share, and profitability targets are achieved. • We are growing faster than our competition. • Our sales are growing, and our costs are in line with industry averages. Sales leaders are interested in results. After all, they are evaluated on and rewarded for goal achievement, and results are the most visible and objective indicator of success. Company results are the organization’s financial outcomes, in which the efforts of the sales force play a major role. Such results can be measured using sales, profits, market share, return on investment, or some other metric, and they can be expressed as absolute levels, percentages of goal attainment, or growth over last year. It’s useful to evaluate results from both short-term and long-term perspectives, because decisions involving the sales force affect both. Other responses revolve around customers. A successful sales organization has: Customer Results • Deep customer relationships and customer trust • High customer retention and low defection • A loyal customer base Customer results affect company results, which is why companies frequently use customer satisfaction scores and customer retention rates or repeat sales to assess how customers view the sales organization. Customers will not buy from people they do not like. Activities Sales leaders say that a successful sales organization allocates its time effectively and ensures that every activity is of high quality and delivers value. Their comments include statements like: • Products that have strategic importance get appropriate attention. • The sales force serves our best customers well. • We participate in new business development, balancing hunting and farming. 6 Building a Winning Sales Force • We spend a lot of time with customers and keep administrative work to a minimum. • The quality of our activity is as important as the quantity. Salespeople’s activities are typically organized in a multistep process that includes steps such as lead generation, needs analysis, solution development, proposal presentation, negotiation, installation, customer service, and account maintenance and expansion. Sales force activities drive customer results. The fourth group of responses describing a successful sales organization focuses on the salespeople. Sales leaders say: Salespeople • Ultimately, it is our salespeople who make us successful. • Our salespeople know our products, customers, and competitors really well. • Our people have the right values, attitudes, and capabilities. • They are constantly learning and developing new skills. • They adapt as new selling processes emerge. • The turnover of high ...
View Full Document

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern

Stuck? We have tutors online 24/7 who can help you get unstuck.
A+ icon
Ask Expert Tutors You can ask You can ask You can ask (will expire )
Answers in as fast as 15 minutes