- Benchmarks for Best Practices -

Market Adaptability

Objective:
To provide quick and targeted response to marketplace opportunities.

Driven by rapid advances in technology, shifting demographics, market consolidation, excess capacity, and global competition, the need to respond swiftly has invaded all industries. To respond to changes in their own particular marketplace, companies are becoming more demanding in their role as customer. These conditions create golden opportunities for those suppliers who have built the capacity to react quickly and thereby capitalize on new and rapidly evolving customer needs.

Organizations still restricted by bureaucratic decision-making delays see opportunities disappear as rapidly as they appeared, either because the competition filled the need or because additional requirements surfaced, reopening the decision-making process. Historically, smaller companies have been more adept at making quick adjustments and decisions. This flexibility has given them a considerable advantage in their marketplace. However, larger organizations are now embracing change and accepting it as the "norm." Customer satisfaction surveys continue to illustrate that the bar is being raised by the customer. Therefore, continuous improvement and the flexibility to adapt to rapidly evolving needs must be incorporated into an organization's response process.

Method:

Develop a "performance culture" that empowers decision-making at critical levels, minimizes bureaucratic delays, and reduces cycle time overall.

Critical Component:

A formal commitment to reduce process steps and eliminate unnecessary points of approval.

To accommodate rapid change, organizations are focusing on their core competencies and, in many cases, relying on their suppliers to provide solutions outside the customer's area of expertise. This reliance requires quick response from suppliers and it is to their benefit to place decision authority with or near their local sales representatives. Thus, forward-looking sales executives will move points of decision closer to the customer. Faced with the evolving needs of the healthcare industry and marketplace complexity compounded by various state regulatory requirements, Allegiance Healthcare reorganized. Assignment of its decision-making resources into five regions provided a better understanding of local customers' needs and challenges and increased the ability to make more efficient and accurate decisions. AT&T Middle Market, Boise Cascade Office Products, GE ICS, and IBM have also reorganized to place decision authority closer to the customer.

AT&T Middle Market's decision process and quick response to the market is facilitated by the efficient collection and circulation of information. All Branch Managers and appropriate strata (headquarters) personnel participate in a bi-weekly, two-hour telephone conference. This forum is designed to share information, solve problems, and recognize and celebrate victories. Since all decision-making functions are represented at the teleconference, the majority of problems can be solved immediately. Those issues that are not resolved on the spot are assigned a champion and a target date for resolution. Fixing problem areas quickly eliminates barriers and allows sales personnel to focus on face-to-face time with their customers and prospects.

All sales executives spend a minimum of one day a month in the field working with the Account Executives. Spending time with AE's, customers, and prospects enables them to monitor the "pulse" of the marketplace. Strata personnel monitor and act daily upon sales units by retained customers, new customers acquired, new products sold, revenue and minutes growth, and customer experiences (complaints from customer executives).

Critical Component:

Investment in time saving methods for communication and information exchange.

Customers experiencing the pressures of market changes are demanding rapid access to and response from supplier personnel responsible for managing their relationship. Customers cited ease of accessibility to their sales representative as one of the ten critical factors considered when evaluating vendors. The five World Class sales organizations recognized in this study have made significant investments in time saving methods of communication and information exchange, positioning themselves strategically and tactically to respond rapidly to the customer with relevant data.

AT&T Middle Market's investment in multiple electronic platforms of communication keeps everyone on top of the latest information. By using e-mail, voice mail, laptops, and cell phones, all relevant personnel can share information on customers, promotional campaigns, solution techniques, etc. Success stories are also "broadcast," enabling the entire organization to model a proven sales strategy.

A General Manager of Sales and Distribution at GE ICS, used an innovative approach that provided the organization with immediate, real world information. "I make random calls to our Account Managers. When contact is made, I begin asking questions. "Where are you? Who did you call on today? How did the call go? Who are you seeing tomorrow? How many new customers are you going to see this week? How many new customers are you going to see next week? What can I do to help? Tell me three things that will make your life easier and enable you to sell more."" Such a dialogue provides multiple benefits to management and the sales force, not to mention it's quick and easy once the habit is established.

Critical Component:

Partner with customers and suppliers to facilitate trust through the free exchange of data.

Buyers and sellers alike are recognizing it is in their strategic interest to form partnerships. The concept of partnering is now embraced on some level by most organizations. However, the implementation of the practice is in various evolutionary stages, depending on which industries and/or companies are examined. The ideal model is one of commonly shared values, visions, and business results. True partnering is built on trust; that trust is developed through the free exchange of data. By either electronic means or face-to-face meetings, Boise Cascade Office Products provides very detailed data to its customers relevant to the account's buying habits and associated costs. IBM assigns Client Representatives to its large volume partners; in these instances, the account is the Client Representative's sole responsibility. In some cases, the Client Representative is actually located in the customer's facility, which promotes a daily exchange of information, ideas, and solutions.

Conducting formal quarterly reviews with its customers is a standard process for Allegiance, particularly with its partner accounts. During this process the customer and the Allegiance account management team review historical purchasing patterns by product, as well as cost savings or additional expenses incurred due to inefficiencies. Allegiance also uses one of these reviews to present to the customer its account plan for the following year, including new opportunities and associated costs. Detailed action steps are outlined for Allegiance and the customer. Overall, regular sharing of data concerning performance and cost builds customer trust.

Critical Component:

Establish an incentive and recognition approach that rewards speed of decision-making and execution.

A common philosophy of World Class sales organizations is to be a "total solution provider." Given the customer and product/services offering complexity, being a  total solution provider" necessitates a team selling approach. When individual performance goals and incentive programs vary among the team members, slow decision-making and plan implementation are often the unintended consequences. Allegiance, Boise Cascade, and IBM ensure rapid decision-making and implementation by linking the incentive and recognition factors among the various team functions.

At Allegiance, compensation is linked to the organization's results. In appropriate instances, compensation can also be based on customer results. Sales team remuneration is both fixed and variable. As the team member's accountabilities move closer to the sales process, the percentage of variable compensation increases. The variable component is tracked on a monthly basis and goals are transactional, i.e., variables can be measured on everything from direct sales to assisting the customer with a cost reduction plan. If a customer does benefit from a "risk-sharing" agreement, the representative receives a predetermined portion of the savings.