Benchmarks of
World Class Sales Forces

From: Management - The Magazine of The Australian Institute of Management
September 1995

by Howard Stevens - The Chally Group

Organizations that have excellent sales forces know how to add value to their customers' businesses

Customers in the 90's are learning to demand "added value." The product cannot just work or get there on time, it must deliver benefit, improve the value chain, and grow the business advantage by either creating new opportunities or, at least, reducing costs. Customers are looking for vendors who understand their business and create solutions that add value. Therefore, the role of sales has become critical.

What customers want

In-depth interviews with over 1,000 corporate customers through our study established three major needs customers expected vendors and sellers to address, even though they were not confident they could get them.

1. Customers want to narrow their own focus to the few things they do best, and outsource the rest without the added overhead costs of supervising their suppliers.
2. Customers want sellers to know their business well enough to create products and services they wouldn’t have been able to design or create themselves.
3. Customers want proof that their supplier has added value in excess of price.

Critical salesperson skills

To evaluate a vendor or seller’s potential to fulfill these three needs, these corporate customers specifically judged sales forces on combinations of seven factors. These seven, listed in descending order of the frequency they were cited, are:

1. Managing our satisfaction personally.
2. Understanding our business.
3. Recommending products and applications expertly.
4. Providing technical and training support.
5. Acting as a customer advocate.
6. Solving logistical and political problems.
7. Finding innovative solutions to our needs.

It’s significant to note that an in-depth understanding of the customer’s business is the most important underlying requirement, and significantly drives the training and development of top salespeople.

Interviews with these corporate customers resulted in their "voting" a group of ten corporate sellers as "best" or "World Class." While none of them were viewed as perfect, they have committed themselves to the goal of meeting all three of these major customer needs. Thirteen of the world class sellers cited as "best" were:

• Motion Industries
• Exxon Chemical
• Boise Cascade Office Products
• Moore Business Forms
• John Deere & Company
• AT & T Consumer Products
• AT & T GBCS
• DuPont
• Grainger
• IBM United States
• American National Can*
• GE Plastics*
• Xerox Business Products*

*Declined to participate in the Benchmark research.

By comprehensively benchmarking ten of these sales forces we identified the critical success factors for "World Class" sales, and the standards or metrics of sales excellence.

This benchmarking research pinpoints how world class sales forces manage customer satisfaction, understand their customers’ businesses, and deliver the other critical benefits.

The basics of
world class sales

The overriding philosophy of these best sales forces, simply stated, is: "Be the outsource of preference." The basic priority, therefore, is to add value to the customers’ business.

• For Boise Cascade or Grainger this means "we’re not an office products company or a supplies company, we are your purchasing department."

• For Moore..."we are not forms; we are information flow."

• For AT & T..."we are not telephones; we are communications."

• For IBM... "we are not computers, or even information; we are decision analysis or problem-solving."

• For Motion... "we are not motors or parts; we are manufacturing improvement."

• For Exxon and DuPont... "we are not chemicals; we are improved processes."

Adding value requires at least three critical elements:

1. Measure (identify) the business needs of customers;

2. Develop the added services to wrap around our products that will guarantee the customers’ business improvement; and

3. Measure again for both continuous improvement refinements as well as proof for customers that their business did improve.

Often, the top sellers have had to make tough choices. Boise Cascade gave up a distribution system that accounted for 40 percent of its sales in order to develop a direct sales force that could add more value and increase margins.

The World Class Sales Benchmark
Research Methodology

1000 + corporate customers interviewed

Sample distributed by

• Size
• Industry
• Geography
• Type of decision-maker
• Public or privately held

Information provided

• Best salespeople/sales forces that service them;
• Criteria in selecting/evaluating sales/service providers to buy from;
• Most important salesperson traits to service them.

Information categorized by

• Salesperson criteria (7 factors);
• Best "world class" sales forces (13 identified).

Ten of the top 13 World Class sales forces agreed to provide access to their organization and information for the benchmark research. Top sales executives, key sales managers, and salespeople were interviewed. On-site visits were conducted and metrics of performance standards collected. Results were organized into eight benchmark best practice categories.

IBM revolutionized its culture and reduced management and staff to get decision-making back to the field in order to more tightly manage customer interactions and satisfaction.

Moore disrupted its sales force, territories, and management to segment by its customers’ businesses. They are developing specialized expertise and specialized salespeople to manage these customer business segments.

Changes at all the world class sales forces are still in process. Customers did not credit these top sales forces with perfection...just being closer to it than their competitors. In fact, most of the top-ranked sellers were surprised to be named. While customers see how far sellers have come, the sellers themselves remain focused on how far they still have to go.

New requirements, new culture

To be the "outsource of choice" forces a seller to refocus the corporate culture. Creative engineers or other technical experts who invent new products are not enough to sustain a competitive advantage.

Too many new products do not match customers’ priorities or are too difficult to understand or use; sometimes they are simply not needed.

A major challenge is moving a selling organization to become "customer driven" from whatever "driving force" had previously dominated corporate strategy. As Figure 1 demonstrates, a simple scale distinguishes the progression companies can make toward a customer focus.

Corporate managers who are rewarded for quarterly profit, for example, have little likelihood of investing in developing "customers for life" relationships or partnerships.

The focus must change from product to benefit or business result. Grandiose products and services with more capacity, features, or options are often just seen as overpriced. Additionally, products and services must be simple to use and manage, either in their own right or because the seller manages the complexity as part of the sale. The focus must also change from price and delivery to ease of use, not only of the product but in doing business with the seller.

The outsource of choice will take responsibility for managing the relationship or, as sometimes defined, the "partnership" between seller and customer. This requires the role of the salesperson, and consequently, the role of the sales managers who train and develop the salespeople, to change.

An examination of the actual sales figures, or "metrics," produces some show-stopping surprises.

Since the salesperson is the key contact point between seller and buyer, the most important skill is that of the sales manager who coaches and develops the salesperson. However, most sales managers are more administrator than coach.

The surprise finding: salespeople who get at least one half day a week, one on one, with their managers are 20 times more productive than other salespeople. This means a manager cannot be fully effective coaching or developing more than four or five salespeople. The results clearly demonstrate that a sales manager having a span of control of more than four or five to one can’t be fully effective, no matter how much formal training is provided or how powerful the compensation plan is.

In addition, well-coached and very effective sellers become so valuable that their role is actually changing. Top sellers are changing from peddlers to relationship managers, from order-takers to consultants. In some cases, order taking, service, technical support, and product expertise are not even directly provided by the salesperson.

Figure 1: A simple scale distinguishes the progression companies can make toward a customer focus.

Eight benchmark processes

In summary, while people and information are the major focus, the study found eight distinct process areas that could be described as critical benchmarks:

1. Establishing a customer driven culture.

2. Market segmentation.

3. Recruiting and selecting salespeople.

4. Training (and development).

5. Compensation (and incentive).

6. Sales service and support systems.

7. Customers' feedback/measuring customer satisfaction.

8. Information technology.

The priority and type of solution in each of these eight process areas varies according to the specifics of the product and market. For example, market segmentation is a priority when different customers or customer groups require specialized added values that are not appropriate for other customer groups. The more dramatically added value needs vary, the more critical market segmentation becomes.

A significant source of error in sales management is the choice of options to approach the need. For example, a seller who identifies a need to segment markets still must decide how to segment: by customer industry, by customer size, by geography, or perhaps by product or service offered.

By analyzing the very different options that the best sales companies selected, and the rationale and effectiveness of the solutions, we can establish a more comprehensive set of criteria that essentially documents the "technology" of market segmentation. The same is true for each of the other seven benchmark areas.

Now, rather than intuit or deduce a solution based on previous and perhaps inappropriate experience, informed sales and corporate executives can apply established guidelines that help analyze and prioritize the options evaluated.

ABOUT THE AUTHOR

Howard Stevens is the chief executive of The H.R. Chally Group, USA and Molloy Associates Pty Ltd, NSW. These are sales research and consulting companies. Mr. Stevens is recognized for his research in measuring and improving sales force performance and customer motivation.

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