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

What Can CRM Do For My Sales

Thanks to the large number of CRM software programs on the market today, most people have heard of CRM software. But many of those people have an incorrect or incomplete understanding of what CRM is capable of doing. This article will describe what CRM can do for your sales. After a brief overview of the concept of CRM, we'll identify some typical sales problems that CRM can solve. CRM became a buzzword in the 1990's. It referred to a technology-driven initiative to unify the efforts of a company's customer-facing departments. This new strategy would restructure these departments around the company's greatest asset - its customers! CRM would allow customer information from across the company to be available to any employee who happened to interact with the customer, enabling the sales team to sell more successfully, the marketing team to segment and market to customers more effectively, and the service team to provide more personal, more effective resolution to customer complaints or requests. Simply put, the technology available at the outset of CRM was insufficient to allow the concept to deliver on its promise. Today, however, the technology is available, and companies of every size and budget are realizing the benefits of CRM technology. Is your company one of them? Do you know what these benefits are? Why Do I Need CRM? Below are some typical problems that can be solved by implementing CRM.... "I want to improve the performance of my sales team this year." Well what do you mean, "improve?" How did you measure the performance of your sales team last year (meaning can you identify important metrics other than total revenue or number of sales)? Here are some specific questions you may ask yourself: o Can I identify the areas of performance in which my sales team did well, and those in which they underperformed? o Can I identify which of those areas has historically had the greatest impact on overall sales performance? o Which of those areas can be improved with the least investment of dollars, time, or training? o Which specific behaviors should I encourage to drive the performance increase I seek? For example, it may be that you had good lead generation and qualification numbers, but fell short in your more advanced sales stages. Or maybe your sales reps seemed to stall out in a certain part of your sale cycle, taking much longer than you would expect to achieve the objectives there and move into the next stage. There are many ways a sales team can underperform. But if you don't have a well-implemented CRM system, the odds are good that you can't accurately answer the questions that will help you improve. The truth is that measurable improvement can only come from measured results. Otherwise, your message to your sales team will continue to consist of frustrated admonitions to work harder or close better. "I think my sales team is doing a poor job of following up on the leads we receive, although I can't say for sure." There are two problems in this statement - the first is the suspicion that your valuable leads are falling through the cracks; the second is the fact that you can't measure the degree to which effective follow-up is occurring on the leads your team receives. CRM is designed to chain together a prospect's progress through the different stages of your sales efforts, from campaign to close. You can see exactly how many leads your sales team receives, and what actions are taken to pursue those leads. This information is available in high-level percentages and in detailed specifics about each lead. "I only know what's in the pipeline once a week - after spending hours calling my direct reports. By the time I'm done aggregating the data, things have probably changed anyway." It's hard to proactively manage your sales team in today's sales environment without knowing exactly how the pipeline for your team and for each rep looks. Identifying regions and reps that aren't performing well isn't possible without pipeline information. When this information is available real-time, you can use your valuable time for coaching and enabling your team rather than collecting their numbers. Opportunity management in CRM gives you and your sales reps and the ability to see what's in your pipeline in real-time. Information can be organized to show where each opportunity is in the sales stage, when it's expected to close, and what the rep expects it to be worth. Furthermore, if you know your sales process well enough to identify factors that indicate high chances of success or failure in an opportunity, certain opportunities can be flagged to help you take the necessary steps to close those deals or keep them from falling out of your pipeline. Over time and with enough accumulated pipeline data, you can begin to understand the probability related to pipeline values in different stages of your sales process. This understanding will help you forecast sales more accurately and identify the optimal pipeline numbers in each sales stage that will maximize pipeline through-put. "My sales reps don't execute the sales process properly. It's hard for me to identify the degree to which they're really following the process. It's also hard for me to mandate change in sales rep behavior." When CRM becomes the tool your sales team uses to manage the information relating to potential sales, it also becomes the medium through which you can mandate positive change. Your sales process can be integrated into the CRM system, allowing you to monitor the tasks and stages that each rep completes for each deal, or giving you high-level statistics to see the degree to which the sales process is being followed by your sales team as a whole. "My reps are not productive enough - they spend too much time doing things other than selling." CRM is designed to automate the tasks that take your reps away from selling. Whether it be · creating quotes or proposals · churning out follow-up communications · communicating internally with others involved in the sales process · saving or hunting for saved customer communications or the host of other tasks that cut into the time reps spend in front of potential customers, CRM can streamline or automate these tasks to free up more selling time for your sales team. "It takes too much time and effort for my reps to collaborate with other groups who could help in the sales process - we don't collaborate as much as we'd like to, and the collaboration we do engage in is inefficient." This is a CRM sweet spot. The whole concept of CRM is to allow information to flow across the enterprise in the instant it's created. Sales data will be made available to key players in your organization who can help move a sale to completion. This information flow can be automated, eliminating the need for manual communications. Tasks will be automatically created, both to remind your team members to complete assignments and to allow you to monitor and follow-up on tasks that aren't being completed. All of this drastically reduces the time your team needs to spend on the phone or sending emails to inform others of details relating to a sale. "My company's customer and prospect information is unreliable." Today is a great day to start reversing this trend. While you may or may not be able to improve the quality of the data you already have, you can certainly ensure that the customer data you create from now on will be complete and reliable. Good data keeping requires 2 things: a policy and a place. CRM gives you both. You define the policy by deciding what information is required for CRM records like accounts and contacts. Duplicate detection tools and other validation procedures defined by you can be created to ensure the purity and entirety of your customer data. And, of course, CRM is the place - the new center of all customer-facing information in your organization. by Andy Schultz Questions or comments? Invoc exists to help companies identify the ways CRM can contribute to measured, sustainable growth in sales, service, and marketing activities. Feel free to contact Invoc using the information below if you would like to explore the possibilities for CRM at your company. Invoc is a Microsoft Partner specializing in Microsoft Dynamics® CRM. 713-240-3549 http://www.invoc.net info@invoc.net Article Source: http://EzineArticles.com/?expert=Andrew_B_Schultz

How Can Smaller Retailers Find Better Replacements For Their Point of Sale Software?

Technology changes so often that businesses often have difficulty deciding when to replace their technology. This is especially true for growing retail businesses that use point of sale software packages to process such things as customer transactions and inventory. Here is a brief guide that can help smaller retailers find better replacements for their POS software applications. It includes suggestions that can help small and medium-sized retailers find ways to improve their efficiency, customer service experience and their bottom lines by choosing point of sale packages that are more appropriate for their needs. Here are some suggestions for small retailers. --Don't buy more POS software than you need. Many small retailers tend to overspend on point of sale software packages because they think they can use the extra features when they expand operations. This isn't always a good idea because most small retailers don't have enough inventory or sales volume to justify using more complicated POS software packages. As a result, it might be a good idea to find point of sale software applications that can be customized to fit the needs of a smaller business. Doing this can save the smaller retailer money and frustration because they won't to need to worry about features that aren't needed to effectively run their business. --In addition, look for point of sale software that is easy to use. Many small retailers have trouble growing their businesses because they have a hard time managing their inventories and how they provide customer service to their clients. Using POS software that is easy to use can solve most of these problems because it makes it easier to doing things such as interacting with customers and keeping physical inventory counts. In addition, it can also help smaller retailers establish better habits that can improve the way they manage their store's overall operations. As a result, using point of sale software that is easy to use can help a smaller retailer grow its loyal customer base and improves its overall efficiency. Here are some suggestions for medium-sized retailers. --Look for point of sale software that can help you control inventory "shrinkage" and improve the overall experience for your customers. Most medium-sized retailers who would like to grow into bigger entities have trouble controlling inventory shrinkage. Furthermore, they also tend to suffer from customer service growing pains that result from making the leap from a tiny store to a bigger store. These problems can be corrected if medium-sized retailers look for point of sale software that helps employees control inventory "shrinkage" and improve overall store efficiency. There are many fantastic point of sale software packages that can help medium-sized retailers control inventory shrinkage, price integrity and the customer's over-all experience. This makes it a good idea to look into these packages because they can provide very good long-term value for a medium-sized retailer. --Furthermore, a medium-sized retailer should also consider point of sale software that is fully compatible with its pre-existing technology. Many cashiers have first-hand knowledge of the nightmares that happen because a cash register has failed them in the middle of a transaction. These nightmares happen because most medium-sized retailers don't consider thinking about the compatibility of its point of sale software with its pre-existing technology. This makes it important for a medium-sized retailer to ask their vendor for technologically compatible point of sale software. Doing this will make your cashiers' jobs easier. It will also make many of your customers willing to shop more often at your store. As a result, finding technologically compatible point of sale software might be the best way for a medium-sized retailer to improve its bottom line. To buy POS software and to find out more information, please visit pos cash registers and restaurant software. Article Source: http://EzineArticles.com/?expert=Scott_J_Thomas