How well organised is the sales
organisation?

In the first of three articles based on an exclusive survey for
Motor Finance, Richard Higham reveals the truth about the way the
industry organises sales
 
 
 

 Most financial businesses are schizophrenic about their
sales organisations. On the one hand they recognise that new
business is an essential driver of growth and profit. On the other
hand there is widespread confusion about what sales does and how it
works.

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To some extent sales organisations are to blame. It has
sometimes suited sales to remain the ‘mysterious domain of talented
individuals’, who shroud what they do in secrecy, resisting all
attempts to apply ‘normal’ business measures. It also seems that
many sales managers in the motor finance industry find it genuinely
difficult to analyse and explain their critical success
factors.

 This article, the first of three on sales management, aims
to shed light onto the ‘black box’ of sales, using information
gathered from surveying motor finance businesses during late 2007
and early 2008, and drawing on comparative experience gained
through working with some 300 financial businesses around the
world, including many motor finance organisations.

Results driven?

Sales organisations are quite rightly measured by result. In
some businesses the focus is purely on volume: each week
salespeople compete to sell the most. Although there is an
increasing emphasis on the quality, profitability and persistence
of new business and key performance indicators are increasing in
popularity, the main focus of measurement is still outputs
(results) rather than inputs (activity).

 The challenge is that while sales organisations and
individuals are measured primarily on results, they cannot in fact
manage those results.

 What they actually manage are the activities that underpin
the result. This does not mean that setting and measuring results
is not important. 75 per cent of the sales managers we surveyed
felt that the management information they received was accurate.
This is not surprising – but it is worrying for the 25 per cent who
do not receive accurate information.

 However, although the information that is available to
many motor finance sales managers seems to be accurate, it often
appears to be incomplete. All those questioned had available
information on sales volumes but as figure 1 shows only 28 per cent
are able to measure case count and barely half (53 per cent)
measure penetration of customers (share of account).

o

 It is encouraging that 88 per cent measure margin and
profit alongside volume – but the lack of sales management
information across the other dimensions is a cause for concern.

 Having information available is one thing – but having it
available in an easy-to-use format is another. Only 24 per cent of
the managers surveyed can say hand-on-heart that their management
information on sales results is easy to use. One of the real
dilemmas facing the sales management of financial institutions
generally is that while there is often an abundance of sales
information it is rarely easy to interpret, user-friendly or indeed
of much use in managing sales activity.

Target driven?

Turning to the methods motor finance sales organisations use to
set their sales targets there seems to be a real disconnect in the
way sales targets are being communicated. Only 16 per cent of sales
managers are confident that their people understand the thinking
behind their sales targets. Half expressed a degree of confidence
about this but over a third (36 per cent) believe their salespeople
do not understand what their sales targets are based on.

 Having salespeople who do not understand sales targets may
be a problem, but not believing that they will be rewarded for
hitting those targets could have a very negative impact on the
sales result. One third of sales managers say they do not believe
their reward system supports their sales targeting, and fewer than
one in six are fully confident about the link between reward and
result.

How well do sales managers manage?

So apart from measuring how much has been sold; hoping they will
find a way of rewarding their people for doing the right thing, and
of course checking expenses, what do sales managers actually
do?

 What they should be doing is managing sales activity, not
sales results. If you go into some motor finance houses you will
find management manically comparing today’s sales figures with the
same day last year and drawing colourful charts on the whiteboard.
Higher than last year and they go home happy, lower and they start
kicking the sales force and preparing their excuses for the next
management meeting. As a result they know where they have been, but
not where they are going.
 The concept of ‘Results – Activity – Competence’ is highly
relevant for motor finance sales organisations, worldwide. If you
want a different result (higher sales, stronger margins, changed
product or customer mix) you need to change the shape of activity.
If you want the activity change to be effective you need to also
change the shape of competence of your sales force. Competence
underpins activity and activity underpins result.

 Good salespeople need good sales managers. This not a
matter of theory alone. It is a really practical matter. If you can
get your sales and sales management competencies in good order then
you will have something that differentiates you as an employer and
gives you competitive advantage. Only 18 per cent of the motor
finance companies we questioned believe they have clearly defined
sales competences and less than 16 per cent are confident in their
sales management competences. Only 13 per cent believe those
competences are well understood and in daily use. If, in contrast,
you can get this right, you will be in a small but powerful
minority.

Training essential

A bare 8 per cent of respondents are certain that their sales
training is linked clearly to their business goals. Start with your
goals and design training that will help you deliver those results.
None of the industry sales managers we questioned were convinced
their sales training was being implemented well. Under 40 per cent
were even partially convinced about this. This is both an
indictment of sales management and a tremendous opportunity. Ask
yourself what you are doing to secure your return in investment in
sales training. The payback can be huge.

 Also, none of our questioned companies were confident they
were measuring sales training effectively. Measurement of sales
training is the key to implementation which is the key to ROI. The
other area to watch is the coaching ability of your sales managers.
91 per cent of the motor finance companies we questioned have some
doubts about the coaching abilities of their sales managers. Over a
third have serious doubts.

 There are really only three things that sales managers can
change in their sales organisation. They can influence the quantity
of sales activity—the time people spend selling. They can influence
the direction of sales activity—the products they are talking
about, with different types of people dealing with different types
of customer. And they can influence the quality of sales
activity—their effectiveness at various stages of the sales
process.

 Managing the quantity of sales activity may be a question
of having the right number of salespeople in the field or on the
phone. While there was a wide variation (reflecting different sales
strategies) it is highly significant that the typical top performer
makes over twice as many sales visits as the typical low
performer.

 Managing the direction of activity is critically
important. Far too many salespeople simply respond to the customers
who shout loudest, and are not focusing on the customers you see as
the most important. Many don’t even know who those customers
are.

 Finally, are sales people carrying out the right quality
of sales activity? It may not be just that the sales people are
better; the difference may be about processes, systems and
resources. Whatever the reason, industry experience reveals that
the quality of sales activity makes a big difference to both the
top line and the bottom line. Sales managers need to focus on the
aspects of a salesperson’s job that make the biggest
difference.

 The industry managers we have surveyed say they believe
that when it comes to quantity, direction and quality of activity,
it is quality that plays the biggest part in the sales result.
However, as figure 2 shows, they do not act on that belief: they do
not focus on the key issues in the way they should.

 But getting that balance right may be the single biggest
step towards running a successful sales organisation.

o

 

 

What makes a good sales organisation?

1. Good understanding of what is happening in the
marketplace.
2. Effective sales strategies communicated clearly to the
sales force.
3. Clear, easily understood management information in the
sales result.
4. Sales targets set early, communicated well and supported by
the reward system.
5. Good information about the quantity, direction and quality
of sales activity.
6. Effective planning of sales activity going forward.
7. Good analysis of the skills and knowledge of the sales
force.
8. Sound plans to develop sales competence, which are business
goal-based, well-implemented and measured.

The author is global sector head at sales improvement
consultancy Mercuri International, which works with over 90 per
cent of Europe’s top 30 financial institutions. Richard-Higham@mercuri.co.uk,
+44 (0)7712 588757