Reallocating Sales Resources

How Are You Going to Spend Your Sales Dollars in 2009?

Now is the time to think about reallocating your spend to improve sales productivity!

We have identified specific opportunities for shifting sales resources, namely to sales IT and lead generation, that will drive the largest increase in sales productivity.

The typical large technology company (over $3B in worldwide revenue) spends approximately 7% of revenue on sales. Smaller companies typically spend a much higher percentage of revenue on sales, as they are far less efficient.

For large companies:

• Program expenses run about 1.7% of sales, or 23% of all sales expense
• Fully half of this program expense is for T&E
• Sales IT expense typically runs 20% of all program expense
• Lead development is 1% of all program expense
  

RECOMMENDATION 1:

Move 1% or 2% of your T&E budget to lead development. You won't notice the reduction in T&E and you will double or triple your investment in lead development, generally a very weak part of the typical sales organization process.

RECOMMENDATION 2:

You've spent your sales IT dollars on infrastructure. Now you need to move your sales IT investment focus to sales productivity (Sales Enablement). This shift in focus will dramatically improve the productivity of your rep in their prep and customer face time activities.

RECOMMENDATION 3:

Competitive program expense averages 11% of all program expense. In many cases, this competitive program expense is used to cover the inadequacies of the value proposition and the ability of the sales organization to deliver it. The cost of discounts is important here too, but buried as a cost. Move your competitive program dollars to sales enablement, which will bolster productivity and contribution margin.

For more information on sales budget reprioritizing please visit the Sales Advisory Practice website.

Are All Sales Leaders Shortsighted?

A key challenge in complex B2B sales organization today is that both sales people and sales management are nearly 100% focused on immediate results. This is understandable -- if you don't deliver this week, you won't be around next week.

However, this also presents a problem to the organization...an insidious problem. The sales person tends to focus on urgent opportunities and issues. Sometimes these are important, sometimes not. What is largely ignored is the important but not urgent issue -- good account planning, relationship development, networking, personal development, etc.

Similarly, the sales manager, and in many cases, even senior management, focuses on the urgent. Helping to win deals, shifting resources, dealing with corporate, etc.

Nowhere in this laundry list of urgent activities is the foundation building for the future, and this weakens the foundation of the sales organization. The longer term activities that bolster the organization's effectiveness is just as important as the short term activities, yet most in the sales organization are measured and paid only on short term results.

Sales Metrics as An Example

Few organizations do a good job with sales metrics. Sorry that's equivocating...let me say it a bit more powerfully.

Most sales metrics are crap!

Fabrications by sales reps or their managers, the formally reported metrics are designed to shield reps from criticism or to position them to receive additional resources. They have no basis in reality. It's not the rep's fault...they're conditioned to believe that the primary purpose of a sales force automation system is to give their management a reason to beat them up weekly. So they keep two sets of books -- the fabricated metrics that hide their activities and opportunities, and a second, private set, usually in Excel (or in their heads) that is a better representation of their real opportunities.

The good news is that most senior executives know that their metrics are crap, and they discount the "information" available through the analysis of these metrics.

It's a real shame...the few companies that have taken the time to train, support and coach their reps to provide good metrics have seen dramatic improvement in their ability to understand the dynamics of their business and to make good investment decisions.

This investment is a multiyear investment. It takes a savvy and bold executive team to initiate a two to three year project with no immediate payback. Why make this risky investment, when the money could be spend on hiring more sales people who could have an impact this year, next quarter, in three to six months? (The state of the art in sales metrics best practices are detailed in this recent IDC report .)

Investments in sales processes is one of the five key sales productivity levers. If sales management won't naturally push on this lever, then the executive team must do so for them. However many executive teams are still neophytes when it comes to understanding and managing their sales organizations. Additionally, the current pendulum swing toward decentralization (ie, nobody at headquarters to drive these initiatives) suggests that in many organizations these important initiatives will remain on the back burner.

Changing the oil on your car is one of those important but not urgent activities. At some point, it does become urgent, and shortly thereafter it becomes irrelevant. Most people don't wait to hear noises from their engine to schedule an oil change; similarly, you should not wait for productivity to plummet, customer satisfaction to decline and revenue to fall off before you make those longer term investments in your sales organization.