Improving Sales Force Effectiveness Using Six Sigma

Abstract For effective sales, companies need to differentiate how they allocate their limited sales resources among existing customers, customer service and new business development (prospects). When ranking Customers and Prospects, the common metric is usually either sales or profits. This paper will show how you can blend multiple desirable sales characteristics including Sales Growth, Close Rate, Payment History, Unit Volume, Repeat Business, along with Sales and Profit, to create an "Overall Performance Factor" for each Customer or Prospect. This Overall Performance Factor can easily be sorted to create an objective ranking of best to lowest performance in which you can prioritize and assign the appropriate sales resources to meet the company's objectives. Background Sales Process / Performance Improvement Project Customer Ranking - Shortcomings of the 80/20 Rule Multi-Measure Approach Needed Created a New Customer Ranking System This Property & Casualty Insurance company needed to evaluate their Sales Process. While they were profitable, earnings were flat for the last 3 years and their investors were punishing them with a low stock price. The analysis led to an evaluation of their Independent Sales Force. They sold insurance through independent agencies. These could be sole proprietors who sell one company's insurance products exclusively or larger multi-agent firms that sell multiple, and even competing lines. At the time of this project they had about 2400 independent insurance agencies. These agencies were their "business-to-business" customers. Ranking their independent agencies based on Sales (traditional method) quickly showed itself as being an incomplete view. They were concerned about multiple measures including Sales Growth, Consumer Retention and Profitability. The company needed to do great in all of these measures, plus Sales/Revenue, to meet the earnings growth expectations their investors were demanding. A Multi-Variable-Pareto calculation tool was used to develop a single customer (or independent agency) ranking. This tool used the principles of Pareto Analysis but allowed them to calculate an Overall Performance Indicator based on multiple performance factors. Multi-Variable Pareto Method Pareto Charts were developed in the late 1800's by an Italian Economist, Vilfredo Pareto. He used this analysis to determine that wealth was skewed to a small portion of the population. In his time, 80% of the land in Italy was owned by 20% of the families in Italy. From Vilfredo we derived the Pareto Principal or 80/20 rule. This is commonly used in sales, with 80% of sales generated by only 20% of customers. Pareto Analysis is a great business tool, but there is more to increasing profit than focusing on just sales, or even just profit. There are leading and lagging indicators of profit growth from the customer base. Measures The first step was to determine what measures defined great customers (or great independent agencies). A cross functional Six Sigma Sales team was formed representing Sales Executives, Sales Representatives, Marketing, Finance and Operations. The Insurance Company Six Sigma Sales Team defined great agencies as having: High Sales $ High Gross Profit % High Consumer Retention High Year-Over-Year Sales Growth By defining Sales Growth as important a measure as Sales $ they were signaling to their Account Executives that focusing on smaller but growing agencies was just as important as focusing on larger, low growth agencies. As you will see in the data below, many high-sales agencies had flat to declining sales. Forced Ranking Force Ranking mathematically equates these different measures for the overall calculation. This process simply makes the largest number equal to a 10. Then all other customers are proportioned with respect to the largest. This Factor is used in the Overall Performance calculation. Overall Performance Factor The Overall Performance Factor is a combination of each measure's factor. You can also weight each measure and use this to calculate the overall performance factor. The last step is to sort the customer list based on the Overall Performance Factor. Then you can make prioritization decisions about how to allocate Sales and Customer-Service time. Top Customers - Get them the most focus, time and service Average Customers - How can we move them up? Below Average Customers - Can use multiple strategies such as using an inside customer service rep versus field rep to service this customer, or remediate them Insurance Company - Customer (Independent Agency) Ranking (Note; the data below is an approximation of the 2400 agents) Agent - Revenue - GP% - Retention - Sales Growth - Ranking Factor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ustomer Differentiators The next step was to determine what characteristics statistically differentiated the best customers from all others. The team brainstormed all possible ways to segment customers. There were 72 different possible classifications. Three characteristics were common (based on statistical testing) amongst the best. These were: Did not already sell insurance Had a Business Plan Were in business for 5 - 10 years Results Instead of treating all customers equally, or rewarding sales agencies with high sales, but no growth, this company differentiated how they allocated sales resources to existing customers and prospects. Sales strategies were developed based on the ranking. Different ranks required different action plans to achieve improvement. Following the analysis, they recruited insurance agencies that were similar to the high performers, trained them to match the business techniques that were used by the high performers and provided marketing support that was most highly utilized by the high performers. Six months following the implementation of this project, this Insurance Company's earnings grew by over 26%. For more detailed information about this subject go to http://www.supplyvelocity.com/ for our white papers. Article Source: http://ezinearticles.com/?expert=Mitch_Millstein

Growing Your Business Profits

Grow your business profits using dollars you have already spent on inventory! Today is a great time to revisit the idea of bartering! With organized barter more automated and efficient, it is a terrific time to take advantage of the increased buying and spending power in addition to the cost savings to operate your business. Many retail stores are closing their doors due to the lack of business and cash flow. Most retail stores believe that by slashing their prices they will cause more customers and traffic to the store. This might be true for that moment, but isn€™t the real objective to gain NEW customers and LOYAL customers? If a store has the inventory and capacity to increase sales without it affecting their hard cost of doing business, barter is a win/win situation. Barter customers bring other cash customers when they talk about the experience. While barter can drive new customers to your store, the new customers can tell their friends and family about their experience and you can gain cash business at the same time you are moving that inventory or filling excess capacity. Example: A business or retail store owns inventory and it is moving slower then expected or needed. Meanwhile the business owner has some immediate business needs that are critical to their business. If the business owner can market their inventory through an online barter website and attract new customers to purchase some of the items for full retail using barter credits, the business owner can then purchase the items for the business using that revenue rather than spending new money! Some examples might be new store signage or printing and advertising! The idea situation is the use the new barter revenue to advertise and bring in additional cash paying customers. Don€™t forget that your new barter clients will be loyal to you and also help promote your business as long as they continue to feel like valued customers and receive excellent value and service from your staff! Barter clients should be a welcome addition to your business and treated as friends. Remember they are also business owners and understand why you are bartering and want to help you grow and prosper in your business also. Cost of Barter: You might wonder what joining a barter organization might cost and also the fees associated with bartering. The fees to join or membership costs vary from each trade exchange. Most exchanges charge anywhere from $195.00 €" $495.00 and up as a membership application fee and monthly fees range from 0-$20.00 per month. Trade service fees on transactions vary from 10% trade or 5%- 8% cash on each transaction. The thing to remember is that you are paying only a transaction fee on what you purchase or sell. In addition consider that many times you can apply for a line of barter credit and spend into the system before you even make your first barter sale! Your local trade broker will also assist you by bringing you new customers to pay the trade credit line back! What credit card company or bank will do all that for you? In fact a great trade exchange will establish a barter budget for you to follow so that you aren€™t taking too many trade credits above what you will be spending in the system. In the barter economy your products and services are more important than your credit score. You can use your inventory to secure a barter loan and make improvements to your business! Consider how leveraging money you have already spent into advertising or maintenance or other ongoing expenses like printing, or landscaping, repairs or equipment maintenance or even purchasing new equipment can add additional profit and cutting costs to your bottom line. Consider how leveraging money you have already spent into advertising or maintenance or other ongoing expenses. Increase sales and profits with money you already spent! Whether you are a service related business or retail store you can benefit by increasing your customer base by up to 10 €" 15% and reducing overhead costs by spending that new found revenue back into your business and YES even consider giving yourself a raise in barter revenue to spend on personal needs. Turn that downtime or excess inventory into what you need or want for yourself and your business. I encourage any business that has a vanishing commodity such as advertising space, hotel rooms, empty seats or room in a cafe or restaurant to use barter to capture that potential lost revenue and turn it into future purchases and increased sales! Need more information on how Bartering can add to your bottom line profits? Ask The Barter Coach! Kathleen (Kathy) Smart is the President and CEO of SmarterIdeas Inc. http://smarterideas.com, and one of the founding principals with the International Business Academies Limited, http://ibalnet.com, an Atlanta Georgia based LLC Kathleen has had over 26 years of experience in helping business owners succeed. Kathleen hosts her own internet based radio programs where she interviews local business owners and individuals who can bring inspiration, information and education to entrepreneurs and business owners. Over the past year she has interviewed, teacher of the year, Ron Clark, Blue Man Group and many others. Her show is designed and dedicated to educate and inform entrepreneurs and business owners with information that can give them the tools that can help them turn that corner in their life or business. Article Source: http://EzineArticles.com/?expert=Kathleen_Smart

7 Simple Tips to Create Success Within the Sales and Marketing Industries

It doesn't matter what the marketing or sales opportunity that you're in is, there are always a few things that remain constant in order to achieve success. In this article I would like to talk a about 7 tips to creating success within the marketing or sales industries; actually these tips can be used by anyone involved with business. Here are 7 simple tips to creating success within the sales and marketing industries: 1. Be Punctual There is nothing worse than someone that is always late; it's rude and unprofessional. If you're supposed to call or meet someone at a certain time then you've got to be punctual. Showing up on time shows that you're professional and you respect other peoples time. No one will ever take you serious if you're constantly showing up late. 2. Warm Up the Client The best way to warm up a client is to become their friend. In a way I would rather have people view me as their friend than just some sales person or business man. When you're able to find some common ground with a person you'll have a much easier time transitioning into you your business. 3. Knowledge You've got to know your product and business inside and out. Remember that people aren't just buying a product they're buying you; the second they see that you don't know what you're talking they'll decide right then and there that they don't want to do business with you. 4. Adapting To Your Buyer Every one of your buyers or clients will be different from the other. You can't say or do the same thing over and over; you've got to adapt to your buyer and make them feel comfortable and relaxed. 5. Trust Building a trust bridge between you and your client is one of the most important things you can do. This can be done by accomplishing the things that I've mentioned so far. Once you've established that trust you don't want to do anything that could ruin it. 6. Have a Plan Don't be one of those business men or women that think they can "wing" their presentation. Have a well thought and organized plan and you'll see that your presentation will go much smoother. 7. Closing If you do all the things that I've mentioned above then closing will be easy. The key to closing a sale is make sure your clients understand why they need whatever it is that you're selling. Once they feel the need for your product or service closing the sale will be the easiest thing you've ever done. I've been trained and mentored by some of the best online marketers on the web today. Our team is one of the best in the business. I would love to help you make a change in your life, and help you learn how to make money online. Take a look at http://www.todaysbiz.org/ and make a change in your life today! Article Source: http://ezinearticles.com/?expert=Michael_Sanofsky