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Brandon Mills
Manager,
ZS Associates
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Jason Bell
Associate Principal,
ZS Associates
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John DeSarbo
Principal,
ZS Associates
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Kyle Heller
Associate Principal,
ZS Associates

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When Is 1 + 1 Really Greater Than 2?

Posted by Ashish Vazirani on Tue, Oct 20, 2015

iStock_000065968031_SmallThe importance of focus when it comes to driving sales force effectiveness (SFE) is a topic I wrote about some time ago. In that post, I pointed to ZS’s SFE NavigatorTM —an approach and a set of tools that will help you decide which SFE drivers are most important to achieve your growth objectives. My objective in that post was to point out the importance of focusing on the one to three initiatives that will drive the greatest impact (… and then move on to the next one or several initiatives). I think we might all agree that focus is critical, but this does beg the question, “If we had a coordinated set of initiatives and a transformation program, wouldn’t the impact be greater? Would one plus one be greater than two?”

To quantify the impact of SFE initiatives, ZS launched the Explorer Study. An extensive analysis conducted over the past year, the Explorer Study answers the elusive question, “What is the realized value of investing in SFE initiatives?” Ultimately, our study has found that when companies invest in a broader sales transformation across several drivers, they can improve their performance by as much as 20% or more within one year.

The Explorer Study (consisting of research from more than 170 companies, including 30 technology ones) grouped initiatives in four categories:

  1. Ensuring the right customer coverage plan
  2. Increasing the impact of each customer interaction
  3. Creating a performance-focused sales team
  4. Enabling efficient and effective sales operations

The study found that an investment in a single initiative in any of these categories leads to a 4% to 8% average increase in revenue, and a 5% to 7% average increase in profitability. Even in technology markets that are growing 30%-plus year over year, an additional 4% to 8% growth can drive significant gains and profitability improvement.

The Explorer Study then examined the impact of SFE programs or transformations—i.e., investments across two or more categories. Companies that undertake these broader and coordinated programs improve their revenue performance by 9%, on average, in the first year, while profit increases by an average of 10%.

Results vary across companies and industries, and five factors determine if a company’s results are likely to fall within or outside the range of observed impact:

  1. Market situation: growth rate and fragmentation
  2. Competitive intensity: competitor strength
  3. Sales force prominence: relative influence of the salesperson in the buying decision
  4. Company favorability: product or service differentiation
  5. Sales force effectiveness: the company’s baseline

While there is variability in the results, the study shows that companies that execute a thoughtful and integrated program drive real and meaningful impact on revenue and profitability. The study found that the best performers follow a clear path: they adopt a continuous mindset approach to SFE, with steady, incremental gains that are punctuated on occasion by more comprehensive sales force transformations. These companies identify a few key areas to improve every year, and they rigorously track the impact of those efforts to ensure quality execution.

Topics: Ashish Vazirani, tech, sales force effectiveness, SFE, profit, revenue, ROI

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AUTHORS
Brandon_Mills-10924_headshot_small
Brandon Mills
Manager,
ZS Associates
Jason_Bell_11099_headshot.jpg
Jason Bell
Associate Principal,
ZS Associates
John_DeSarbo_thumbnail
John DeSarbo
Principal,
ZS Associates
Kyle_Heller_thumbnail-1
Kyle Heller
Associate Principal,
ZS Associates
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