"Example of an Executive Summary"
Sales Management Process Evaluation Sales Management Process Management Example of an Executive Summary Mercuri International, the world's largest sales training and development consultancy, was founded almost fifty years ago. Today, Mercuri has grown to over 700 people located around the globe and is established in over 40 countries in Europe, Asia, North and South America, the Middle East, South Africa and Australia. Mercuri has been selected by more than 15,000 client organisations worldwide. For additional information on Mercuri International, please contact us on +44 (0) 121 706 3400 or +44 (0) 1932 844 855 or by sending us an e-Mail firstname.lastname@example.org. Sales Management Process Survey ‘Quick Scan’ Report A Report Paper produced for: XYZ Ltd Sales Management Process Project Team Background and Rationale for the Project Report Overall Background and Rationale Current Situation There are various Sales Management Systems being used (Logix, spreadsheets, etc), but the key issue is to drive a behavioural change in sales management (where it is necessary). Systems do not motivate and lead sales people…managers do! Basic Requirements The XYZ Ltd covering letter to the managers describes the basic requirements of the Sales Management Survey: Customers are requiring their suppliers and partners to increase the value provided. In order to satisfy this requirement XYZ Ltd must understand their businesses, adding to the product and application knowledge a deeper understanding of their industries and buying behaviours and how our products and value add services can resolve their specific needs and support them in meeting their business goals. We have undertaken several changes in the way we approach sales management over the last eighteen months in order to meet these customer needs. In order to evaluate our sales management processes to achieve this business objective, we have co-designed with Mercuri International a Sales Management Survey. This will help us identify where we can improve business performance and support you in your sales management role by providing tools and skills. The questions are specifically designed to be answered from your business point of view in order to establish where best practice in sales management exists within EMEA in order to replicate the critical success factors. This survey will allow us to benchmark ourselves against Global Best Practice Sales Management. Sales Management Process Efficiency (SMPE) Project Description The following steps detail the project method. Interview Phase Review current practices and processes though structured interviews with selected Sales Managers to validate the current Sales Management Process (SMP) development. This includes obtaining documentary evidence about the sales operation including:- Interactions between departments Previously mapped processes Activities undertaken with the sales teams Format of sales meetings and staff 1 to 1’s The interviews (telephone and direct) are to support the design of the SMP programme of development and validate the key recommendations of the SMPE survey (detailed below in the conclusions and recommendations section). Survey Phase Business and Sales Managers have been surveyed to capture best practice and measure knowledge, skills and activities against the sales management criteria which give the greatest probability of success. This information was gathered using “virtual” interviews with XYZ Ltd by a tailored Questionnaire. The analysis compares XYZ Ltd’s Sales Management efficiency against international benchmarks and best practice using a specialised analysis tool, developed by Mercuri over the last ten years. Based on the results, a bespoke, best practice sales management process for XYZ Ltd, is being designed. Installation and implementation of the new processes and XYZ Ltd tools will be achieved through a series of workshops involving, 1:1 coaching, support documentation and aide-memoirs will form part of this process. Mercuri International will provide assistance to the sales managers in explaining to the sales teams what the process is all about and what implications it has for them. The objectives of the survey are as follows: To scope a comparative evaluation of the sales management process within XYZ Ltd EMEA with a view to sharing best practice approaches To recommend a Sales Management Process Implementation Plan, inclusive of tools and skills development Sales Management Process Efficiency (SMPE) Methodology for XYZ Ltd The Sales Survey was carried out by Mercuri International with 64 sales managers: Each manager has been allocated a serial number in order to keep the anonymity of the results but the key to these may be given in certain sessions, dependent on the wishes of XYZ Ltd. The serial numbers for each manager are in the left-hand column of each table in the report. These will be used throughout the report and on the feedback. This ‘Overview’ is a general report covering the 14 countries which have been grouped by region as colour-coded above. There are eight sales management areas in the questionnaire. These are based on the following sales management principles: Where sales managers do not have information in key sales management areas, there is questionable management and therefore questionable achievement of results, as the manager needs information in all these sections to manage; achieving the results for today and planning for future results. Where there are gaps in information it may not be critical but it shows that this sales discipline is not monitored and therefore not managed. There were 25 questions in the survey with 1-25 allocated to the following sales management principles and Question 26 giving an overview of the managers’ evaluation of XYZ Ltd sales management strengths and weaknesses in a Sales Management ‘Scan’: Internal Sources MARKETING INFORMATION ON MARKET CUSTOMER TRENDS AND External Sources INFORMATION COMPETITION Sales and Question 1 Marketing Strategy Company Decisions STRATEGY - STRATEGY DEFINITION AND POLICY DECISIONS IMPLEMENTATION PLANS Sales Question 2, 3, and Marketing Strategy on Product Regional Decisions 14, 18, 19 and Customer Mix, etc… Analysis of Past Results Future Result/Budget Question 4, 5, 6, Question 4, Analysis of Past Activity and Motivation Question Activity Plan & 9, 10, 11, 15, 16, 22, Motivation to achieve 24a, 25 budget Question 7, 8, 12, 13, 17, 20, 4b Analysis of Past Competence Development Plan to Question 21, 23 achieve Activity Question Question 21, 26 Detailed SMPE Observations and Recommendations Summary Sales Management Scan Observations on the Scan – (detailed recommendations is not included here) The managers view most areas as positive. There is no system to measure new business acquisition as distinct from cross selling or up-selling to existing customers but this is the most important area overall for the managers in their opinion. The managers are dissatisfied regarding the allocation of resources and productivity measurement and these are the second and third most important factors. Measurement systems of individual performance are an area of importance that could be improved. Market Information Competitor knowledge is the weakest knowledge area; competitor benchmarking in both sales process and product does not appear to exist in any standardised form. The managers are focused on pricing pressure from major competitors as well as having to defend markets from smaller niche providers. Price benchmarking on the internet and against competitor tenders means XYZ Ltd have to sell the value of the entire package and include business arguments related to medium-long term cost of ownership and technological integration. Market information is gathered on an individual/local/regional basis but where trends are identified, there does not appear to be a consistent methodology to direct sales efforts in that direction either nationally or in the region. Recommendations A better understanding and mechanisms for sharing competitor knowledge needs developing. A value-based sales process needs to be re-enforced and expanded. Market analysis of trends must be linked directly to the Business Plan and sales activities. Early warning of regulatory change and the effects on the market, needs action in relation to product development and promotion. Sales and Policy Decisions Observations There is a cohesive XYZ Ltd strategy governing sales team direction and planning. There is a regional strategy and policy making that appears to have a strong impact on the direction of sales activity but as previously stated, not necessarily linked to Market Information. There appears to be a Business Plan in each region and evidence of a flexible approach. There is an indication that a clear and consistent customer service strategy is required. Market strategy and policy making appears to be a conscious process in XYZ Ltd but with no detailed targets (measurable SMART objectives) to direct the sales plan related to market change. Recommendations Before Business Plans are agreed, there should be a national/regional policy statement made with regard to the preferred direction of sales activities, for example, growth products, growth markets/customers/users and expected results from these areas. All new sales activities should be in line with the strategy - both global and regional. A customer service strategy, differentiating XYZ Ltd from competitors should be developed. A competitor strategy should be adopted to direct the XYZ Ltd sales operation to both attack susceptible markets and defend against aggressive competitors. Past Results Observations The data concerning the trends in past results is largely unavailable going back three years – only 34% of managers can give 2004 figures against around 70% in 2006-7. The number of team budgets achieved has increased from 45% in 2004 to 58% in 2006 according to the data supplied and they are projecting 63% in 2007. The under-performing sales representatives have increased overall from 40% in 2004, to 48% in 2005 and to 58% in 2006 – so there are more under-performers but more teams achieving budget and therefore the over-performance has increasingly made up for the under-performance - on average over-performance has gone up from 16% in 04 to 47% in 06. Though there has been growth year on year, the average growth is declining from 24% for both Actual and Budget in 04-05 to 2% for Budget and 7% for Actual and in 06-07 it remains relatively static at 7% for Budget and 7% for Actual. Budgeting appears progressive for just over half of the managers – increasing year on year with a quarter negatively budgeting and a quarter fairly static. Budgeting is extremely good in Austria, Italy and parts of the UK. However, most countries show little evidence of good practice with poor budget setting against actual achieved the previous year; reliance on ‘super salespeople’ and over- budgeting new starters. There is evidence of under-budgeting to achieve easy targets in many cases. A quarter of the managers are achieving too much of their team’s budget and over half appear to have a lower personal budget than should be the case (though there may be regional reasons for this concerning other duties). The Channel budgets average 28% of the managers’ targets and this type of sales management of third parties demands a different approach in development despite similar principles (coaching and monitoring third party activity to achieve the result). Recommendations Sales managers must have a system to track results over more than one year. Future budgets should be a combination of past trends, future policies and requirements, market conditions and the potential of the customer base – they must include a growth plan. Where there is excessive over-performance, a method of evaluating the budget setting rationale is necessary. Under-performers need steering up or out. Managers should focus on the development of sales people rather than excessive personal sales and some also need to hold a personal budget where this is too low. Sales management development also needs to be taken one level down to the Channels where this is a significant part of the target – managers need to be able to coach their Channels. Future Results Observations The data concerning future budgeting accuracy shows that of the 56% of the managers who supplied data 58% are budgeting accurately in 2004 (hitting targets within +/- 10%) and the trend appears to be improving. Historical budget accuracy is hampered by the lack of data as only 27% could provide data for 2004-2005 and of these only 40% exhibit future budget accuracy. Whilst there appears to be a business planning process supporting the achievement of result, in reality there are a number of indicators that show a lack of a business planning process, for example, individual over-performance of 410% against budget and under-performance of -87%. Half of the managers planning future results over-budget and half under-budget. Team over-performance ranges from 16% to 52% - figures that indicate a conservative budget methodology. Of the 34 new sales people recorded in the data, 85% of them are over-burdened with high budgets that cannot be met and therefore they fail in their first year and 40% have equal or higher targets than the average experienced salesperson. Recommendations Future budgets should be a combination of past trends, future policies and requirements, market conditions, experience of the salesperson and the potential of the customer base. A clear and detailed business planning format and process needs to be installed. Over-budgeting and, more critically, under-budgeting needs evaluating and accountability imposed if budgeting is grossly inaccurate. Consistent failure to meet targets by more than -10% must carry a consequence. New starter budgets should be based on best practice rather than the belief that salespeople can take a territory over and ‘farm’ the previous salesperson’s customers with the same result or better. The benchmark companies have a scaling of 35% of the average budget for a new starter in the first year of service and 64% in the second year, reaching 100% in year three. This is a formula that appears to work in the top benchmark teams who have a high retention of sales people. Of note in these companies is the mentor system where a new starter operates with an experienced salesperson in the first six months and builds an entirely new sales platform from the prospect bank, thereby not prejudicing any existing customers’ business. Past Activity Analysis and Motivation Observations There are standard systems for recording and analysing sales activity in 60% of the managers’ organisations but the benefits of the current reporting structures do not appear to be overly useful for the sales managers in measuring ratios. New business generation of 17% of the result is not enough to cover lost business in a quarter of the managers’ markets and around half of the managers have a concerning lost business trend. Growth in the market appears to be around 5% a year for 75% of the sectors which means that the average budget/actual increases of around 7% per year give real sales growth of around 2% on average. There is a good understanding of the sales process but improvements in selection criteria, value based selling and understanding customer decision making will be required to improve the average of 22 prospects to 1 order. Sales process problems occur in the presentation-negotiation-close part of the process where pricing and XYZ Ltd’s Terms and Conditions appear to have an adverse impact. The reward system appears to be in need of simplification and does not appear to motivate in around a third of the managers’ sales operations. s s Current KPI' are not standard in KPI and performance data to establish KPI' is s difficult to use. Suggested KPI' for the future are as follows:- New business opportunity measurement. Growth rates - revenue by sector. Key account relationships - stability of relationship indicators. Success ratios in the sales process. Customer strategy plan - progress and deviation. Customer contacts. Forecasting accuracy. Accurate and easy to use sales performance data matrix by product/ region/person/project. Enablers and disablers are as follows: There is for the most part a good cooperative ‘feel’ in the company. The managers have strong belief in the product and service offer and quality. The managers feel supported by their managers. The managers have a lot of respect for their sales team but in some cases feel there are not enough of them. Though the managers feel they have good tools they feel that there is too much reporting and paperwork. Managers feel they do not have authority and feel limited by company policies. Logistic problems and quality issues inhibit sales. Competitor activity is the major inhibitor and appears to be one of the areas that XYZ Ltd need to gather more information on – a market SWOT is recommended. The pricing strategies of competitors needs a counter-strategy. Recommendations Create a standard system of KPI’s for analysing sales performance that reflects the total job of a sales person. Establish a new business activity plan based on the growth plan, market conditions and lost business ratios. Activity Plan and Motivation Observations Business data usefulness in directing future activity is in question. Strategy governing future activity is clear and well communicated. There is a questionable reward structure to encourage sales activity in the right direction and managers appear to be hampered by the limitations of the current process. Sales managers in a few regions are being frustrated in their future activity planning by; the internal systems that demand various approvals - the risk of committing to the customer without full trust in business unit support to fully execute the project (and therefore spending time on repairing the damage) as well. KPIs are focused on past result and partly on activity but in the main do not take into account ‘total business performance’. Only 20% of managers make reference to conversion ratios in the sales process. There is little evidence of any consistent activity measures. Activity planning and motivation systems are being employed with pockets of ‘best practice’ evident on a ‘local’ level but no standardization. Recommendations Sales planning regarding activity spent on new and existing customers should be based on an evaluation of lost customer percentages, average new order values, conversion ratios and lead times. Create an overall company scheme of rewards linked to total performance and agreed KPIs. Selection criteria and qualification of these in the sales process should be made clearer and based on target industry sector growth areas. Analysis of Past Competence Observations The managers are undertaking a reasonable number of competence development related events per quarter. The majority of sales people in the teams are relatively new to XYZ Ltd (average length of service is 3.6 years). A third of sales people are in the ‘very experienced’ bracket – those who are 6> years in service with XYZ Ltd but only half of the sales teams have this type of salesperson. XYZ Ltd appear to have lost 25% of salespeople over the last three years, which compares unfavourably with most B2B companies who lose on average 21% a year (however, 21% is not a good number). There does not appear to be a standardised methodology to measure competence and those in place appear to be mainly subjective. Recommendations The quality of coaching and training needs to be improved. The speedy installation of a Sales Management Process (SMP) will help to retain good sales people. A formal methodology of competence assessment needs to be created. Development Plans to achieve Activity Observations There is no set format for the identification and assessment of future development needs. On average 22% of management time is spent on field observation. Recommendations Create a competency framework for the role of sales and management functions. Introduce a formal assessment procedure for sales people and for managers. Introduce a formal development process for both. Measure your employees against the framework to create personal development plans linked to your business strategy. Up-grade and develop the role of field coaching and train managers or senior sales ‘mentors’ to coach.