To Improve Sales Force Effectiveness, a Business Case and Implementation Plan Are Critical
Some high-level athletes don’t work out. Often they rely on natural ability but don’t focus on the fundamentals or learning the playbook. The same mindset applies to many technology firms, which are often growing at hyper-speed and don’t think they need to take active steps to improve their sales force effectiveness (SFE). Or these organizations think the lessons learned by other tech companies don’t apply to them.
ZS recently published a study showing that on average—across industries—a coordinated set of SFE initiatives can help companies improve revenue and profit by roughly 9% to 10%. In terms of ROI, the numbers are compelling. For example, consider a company with annual sales of $1.5 billion that invests $3 million on an SFE transformation. A boost in revenue of 8% translates to an incremental ROI of more than 1,400% in the first year (assuming 35% gross margins). Even a smaller, incremental revenue increase of only 1% equates to a one-year return of 175%.
Yet when your industry is growing at 30% to 50% a year or more, as some tech segments are, it may not seem worth your time to try to wring out an additional 9% to 10%. As I frequently hear when talking to sales execs, “We’re in a growing market and want to capture our fair share.” These companies are like athletes declining to do wind sprints because they’re already pretty fast.
Yet merely “growing with the market” is an inherently limited, passive approach, and one that has consequences. It’s not a recipe for increased share—which investors like to see and will reward, for both public and private companies. Moreover, merely growing with the market puts companies at risk of slowing with the market as well. When rapid expansion inevitably starts to flatten, companies that have laid the foundation for sales force effectiveness will be one step ahead of those enjoying current market prosperity without regard for tomorrow.
As part of ZS’s Explorer Study, we recently published a follow-on paper about how to build a business case for SFE investments. It discussed several elements, and one of them was a clear implementation plan. For high-tech companies, like most firms, implementation is probably the biggest challenge of SFE initiatives. Why? It’s easy to launch new initiatives (tech companies are great at starting things), but much harder to actually see them through.
SFE programs typically take 18 to 36 months to register gains. That’s an eternity in the tech space. All too often, the initiative was linked to a specific executive, who may be in a new role or not even with the company 36 months later.
Tech companies are also notorious for getting distracted by the next big thing. Even if an SFE initiative is underway, tech executives often get seduced by new technologies or the latest solutions with lots of buzz. In fact, the real challenge with implementation is that there isn’t always an app for it. Instead, success lies in commitment and discipline to stick with the plan and drive changes to processes and behaviors, which takes far longer to get right than simply subscribing to a new cloud or mobile application.
How to fix this? A couple of specific steps will help. The first is setting the right level of accountability. Many companies hand SFE initiatives to a single executive as a collateral duty. That’s a guaranteed way for the program to end up on the back burner once he or she gets busy. (And everyone invariably gets busy.) Instead, companies should establish a dedicated SFE function, either in the sales ops or sales strategy department. That function should be overseen by a group of people who have collective responsibility for the company’s SFE performance, but that group should be accountable to the head of sales.
Second, companies need to be realistic regarding the time required to generate gains. Launching the initiative is the easy (and fast) part. Following through, and making sure those behavioral and process changes stick, takes far longer. Set realistic timelines, break them into shorter-term, achievable objective, and communicate progress to the sales force repeatedly. (If you go public with a goal, it’s harder to simply walk away from it later on.)
In sum, there’s no silver bullet for SFE and no app either. The trick lies in staying with the plan, through a disciplined effort over time. As with athletic performance, effort—intelligently applied—yields results. Companies that do the hard work today will give themselves an edge tomorrow.