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Businesses that face challenging headwinds will quickly seek cost cutting measures, including restructuring and improved procurement. Those enjoying growth will typically prioritise strategy and accelerated marketing efforts. Rarely is sales effectiveness addressed by businesses in either scenario. Those that do generally benefit from significant EBITDA gains.
Just what benefit does a sales effectiveness initiative yield? It will depend on the extent to which the sales team is already focused, engaged and enabled:
When we assess teams, we rarely find all three pillars score highly.
If the root cause is related to focus – for example, an absence of full profitability by customer understanding, or where opportunism prevails over a targeted approach to prospecting market segments with the most promise, or where performance management pays less attention to leading indicators – then yields can be high and results fast.
On the other hand, if the team are focused but not fully engaged – for example, leadership is wanting, or the culture toxic – interventions can deliver similar returns, though will likely require more patience and are harder to attribute directly.
A comprehensive study of hundreds of projects undertaken by ZS Associates, a leading sales effectiveness specialist consultancy, concluded that projects focusing on a specific category of sales effectiveness resulted in revenue and profitability improvements of between 4 and 8%. Where the engagement was more wide-ranging, to transform the sales function, these improvements rose to 9-10%, for both revenue and profitability. However, these findings were based primarily on experience in the pharma sector, where investment in sales effectiveness is more common and longstanding. Companies in other sectors will be more likely to achieve more substantial breakthroughs in performance compared to the incremental gains in pharma.
Other recent studies support this point. One specialist advisory firm to UK private equity portfolio companies, the Sales Blueprint, recently reviewed its own projects to conclude that implementing effectiveness levers resulted in top line growth of as much as 25% within 18 months. Like Better Faster Growth, their focus is on medium-sized firms who typically had not benefited from previous investment in sales effectiveness.
In our own experience, benefits of between 5 and 25% to top line growth and profitability should be possible with senior leadership sponsorship and a sales team willing to embark on a continuous improvement journey to raise their game and become more effective. The timing and extent of benefits will vary depending on the ‘dimension(s)’ addressed:
Dimension
| Revenue / Cost Impact – Illustrative (varies by organisation) | Impact Timing | ||
Focused | 1. The right customers / prospects | 5 – 25+%. Refocusing on profitable customers and segments, addressing the unprofitable tail | < 3 months | |
2. The right channels | 5 – 10%. Addressing cost to serve through shift to lower cost and / or more responsive channels | 3 – 9 months (reflects complexity of shifting) | ||
3. The right products / services and value | 5 – 10%. Promoting the right products and services at the right price | < 3 months | ||
4. Performance management | An enabler. Focusing on leading indicators (as well as outcomes) and quickly pinpoint underperformance | < 3 months | ||
Engaged | 5. Culture | Enablers – can be transformative, benefits typically take longer, 5-10% | Empowered and focused on performance and doing the right thing | 3 – 12 months |
6. Leadership | ||||
7. Incentives | Motivated to focus on the right behaviours for company success | |||
Enabled | 8. Competencies | 5 – 10%. The right skills aligned with the right roles and a team focused on continuous learning. | 3 – 12 months | |
9. Processes | Up to 30% if processes (including lead generation, retention, winning back lapsed customers) suboptimal | < 3 months | ||
10. Organisation | Up to 20% if structure (spans of control, sales targets per person, territory potential, mix of hunting / farming) suboptimal | 3 – 6 months | ||
Specialists in accelerating Business Growth