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Improving sales management.

Improving Sales Management

In the previous article, I addressed the eight most common problems encountered with sales supervisory programs and offered recommendations for solving them. In this article, I will discuss five major sales management systems and suggest ways a distributor can either implement these systems or, if they are already in place, improve them in order to maximize sales performance. The five systems that will be discussed are as follows: sales routing, individual account sales plans, sales supervisor "workwith" programs, compensation systems and quotas.

Sales Routing

Sales call routing is often a very poorly managed function, resulting in a breakdown in the saleforce's ability to support the sales plan. This may strike some as a minor problem, but is actually a major one. If the salesman cannot complete tasks set out in the sales plan because of poor routing, the sales plan will not be accomplished. As a result, the company will not achieve maximum results.

There are a number of causes for unmanaged sales call routing, including heavy call loads, imbalanced daily call loads, unscheduled sales calls or movement of the account service day.

Sales calls are often "managed" through evolution rather than strategic marketing techniques. Over the years, routes are gradually modified. Instead of allowing evolution to manage routes, once or twice a year management should totally reroute the company's salesforce based on the marketing plan, market dynamics and specific company needs. Most sales managers and owners know the principles behind effective routing but, because it is a laborious task, very few companies totally restructure their routes with any frequency.

Call Frequency

As a consultant, I encounter four common problems related to sales routing within the beverage industry. The first is call frequency. Call frequency is often determined by individual sales people rather than sales management. Most companies have a policy that salespeople are not allowed to change the call frequency of an account without getting approval from management. From our experience, only ten percent of wholesalers strictly enforce this policy. This is another example of sales management knowing what needs to be done but not following through on its own plan.

A distributor cannot let a salesperson determine call frequency. The reasons for this are obvious. Salespeople do not always know the overall sales plan; therefore, they cannot understand how changing a few accounts upsets the underlying plan that management had in mind when it initial established the route. Salespeople are often driven by self interest and will schedule their accounts to accomplish personal goals. Also, salespeople are in the business of keeping customers happy regardless of cost and the implications to the company. Salespeople have the tendency of calling on customers more frequently than they realistically need to be. This not only impacts their effectiveness, but also has a dramatic effect on delivery. A wholesaler cannot allow salespeople to make decisions regarding call frequency independent of management approval.

Call Workload

The second common sales routing problem is excessive call workload. Salespeople often have too many sales calls. This occurs because the management team or sales management has not decided what is realistic in terms of a day's work. Additionally, management often tries to reduce expenses by increasing the salesmen's workload. The result is that either accounts are skipped or a poor quality sales call is made due to time constraints. If a distributor gives a salesperson 35 calls to make on Tuesday but he can only effectively make 25 because of the size of his accounts and the geography, then the salesperson is going to make a decision on the other 10 accounts. The decision is either going to be to change the frequency or to skip the accounts altogether. Both of these actions may be the correct action, but the wholesalers have to ask whether it is the individual salesperson's responsibility to make the decision. In other words, is the salesperson qualified to make the decision on the 10 accounts without asking for management approval? Giving salespeople too many sales calls is asking for trouble. If sales management wonders what a reasonable workload is, it can best determine this by spending a day with a salesperson. That is the only way sales managment will ever know if a salesperson is overworked or underworked.

Call Balancing

The third common sales routing problem is that the calls per day are not balanced. For example, on Monday a salesperson might have 30 calls, on Tuesday 40, on Wednesday 15, on Thursday 35 and on Friday eight. If this is happening, then it is an obvious red flag that routes have been designed to accomodate factors that are not in the best interest of the distributorship. If a salesperson has too many calls in one day, he is not going to be able to make quality sales calls. If he has too few calls on another day, then the wholesaler runs the risk of low productivity.

To remedy this problem of unbalanced routing, we recommend that management have its data processing department or sales department run a report that will tell how many sales calls each salesman has scheduled for each day of the week. This gives an indication of whether or not call days are balanced properly. Management must also make sure that the actual sales calls are being made as stated in the computer. I often find that the actual routes are not run the same way they were originally set up in the computer.

Call Shifting

The fourth common sales routing problem is that salespeople shift account service days without management approval. As stated earlier, many wholesalers have a policy that prevents this from happening from very few wholesalers enforce this policy. Salespeople should not be given the authority to move an account. Not only does this jeopardize their own productivity, but also the productivity of the delivery force. Further, it can even impact warehouse loading efficiency. Some distributors assign accounts to salespeople and let them schedule the sales calls and call backs without management input. The sequencing of accounts must be managed by sales management or supervisors. In our experience, we have found that very few supervisors understand the total routing concept and, therefore, they require significant training prior to completing an effective reroute.

In reviewing sales routing practices, a wholesaler should ask the following questions: When is the last time we performed a complete rerouting instead of just a route modification? Is there a corporate service policy for determining call frequency and who is actually responsible for enfording this policy? Is the sales call workload too heavy, too light, or just right? Are our calls per day per salesman reasonably balanced? Are salespeople moving the account service days without management approval? Who is controlling the scheduling of sales calls and call backs, the salesmen or the sales supervisor?

Individual Account Sales Plans

There is a disturbing trend in the beverage industry that has a major impact on individual account effectiveness. Namely, salespeople are making too many decisions at the individual account level. In effect, there is a lack of individual account sales planning for shelf management, pricing, product mix, distribution, merchandising activity, service level and the like.

This is not to say that sales management fails to communicate sales plans and product strategies through either weekly department meetings or one-on-one meetings with individual salespeople. However, even with these meetings, the wholesaler is making the mistake of giving salespeople too much leeway in making these crucial decisions. Individual salespeople know their accounts better than anyone else in the company, but they are not always capable of making the right decisions. On the other hand, it is not practical for a distributor to make every decision on every account. A happy medium has to be achieved. If a wholesaler's management and supervisors concentrate on developing individual sales plans for each key account, this may mean 400 accounts out of 2,000 or 200 accounts out of 1,000. In doing so, a wholesaler will have more control over what is happening in the accounts that are generating the vast majority of the volume. Determining individual account sales plans for 20 percent of the accounts is a management undertaking.

If a wholesaler allows salespeople to make these critical decisions independent of individual account sales plans, the following problem will arise. First, decisions made by salespeople will not always be in the best interest of the company. The classic example of this is the salesperson who shifts accounts from Friday to some other day of the week in order to be able to get off work early on Friday. Another example is the salesperson who replaces one of the distributor's existing packages with a new package in order to win a sales incentive contest.

A second problem that arises from salespeople making all the decisions is that full-line selling becomes impossible. Full-line selling does not mean selling every product to every customer. Full-line selling means selling the customer. Full-line selling means selling the customer the appropriate packages offered by the distributorship. All packages must be evaluated to determine which are correct for that retailer and which fit into the distributorship's overall sales plan. Salespeople often lack the training, information or time management skills necessary to make these decisions. This is why management must get involved in this decision-making process.

A third problem that arises when salespeople are allowed to make the individual account sales decisions without management input is that managing individual account gross profit becomes impossible. As discounting continues to increase and as product mix becomes a major sales management task, decisions made at the individual account level impact the distributor's gross profits at the account level. The cumulative effect of all these decisions impacts gross profits at the company level.

Some companies have individual account sales programs in place. I find that many of these programs are informal and that management follow-up is very poor. In these companies, it is not uncommon for the owner or sales manager to feel he has a good program in place for sales planning and that the program is working. Upon reviewing the program with the sales supervisors or the sales people, what I often find that, instead of having formal individual account planning programs, companies only have an informal review procedure on a quarterly basis.

It is not unusual in these circumstances for general account strategies to be developed - for example, increasing distribution or selling a cooler reset. These are good ideas but not specific enough to give salespeople instructions on what they have to do to achieve company goals. The other side of the problem is that a supervisor arrives at an understanding of general strategies with the salesperson, but the supervisor never follows up to make sure the salesperson is carrying out the general recommendations. The wholesalers must review the individual account sales planning process and make sure it is achieving the desired results. This tool is vital for a sales supervisor since it provides specific instructions to the salesforce on an account-by-account basis.

"Work-with" Programs

The time that sales supervisors spend "working-with" a salesman is usually not controlled. There are three common problems in this area. First, "work-with" schedules are not developed and managed by the sales manager. A schedule usually needs to be developed that determines which salesman the supervisor is going to "work-with" and on which day of the week, ideally four or five weeks in advance. Even though it is impossible to adhere to these schedules 100 percent of the time, if the wholesaler does not schedule the "work-with" times he will find that the supervisors accomplish far less "work-with" than planned, needed or desired by management.

The second common problem with sales supervisory "work-with" systems is that individual salesmen's training needs are not adequately defined and are not tied in with the "work-with" time. "Work-with" time should be used to address specific weaknesses. If this is not structured and documented, sales management has no way of making sure each salesman is getting adequate training and that weaknesses are being addressed.

A third "work-with" system problem is that accounts need to be evaluated and audited. Where corrective action must be taken, the action must be documented and management must follow up. If supervisors are doing "work-withs", but there is no system, then the wholesaler probably does not have a formal method of evaluating accounts. This usually requires a form that the supervisor fills out on an account-by-account basis when he is "working-with" a salesperson. The account should be evaluated based on criteria agreed to by sales management and the sales supervisors, and explained to the salesforce. This can be tied into the individual account sales plan. Once the accounts are evaluated, the action needed for each individual account must be documented and a copy given to and signed by the salesman. Then it is the salesperson's responsibility to make sure the corrective action is carried out. If the supervisor retains the original copy, he can follow-up to make sure the corrective action has been taken.

If supervisors are spending time working with salespeople but do not have a "work-with" system, the wholesaler probably is not getting all he can get out of this "work-with" time. Since working with salespeople is the most important job of sales supervisors, it is imperative that a system is in place which will help them maximize the effectiveness and results of their "work-with" time. It is management's responsibility to make sure the sales supervisor has an effective "work-with" system.

Compensation Systems

It is not unusual for compensation systems to work against the company rather than for it. The two most common problems are the following; First, sales supervisor compensation programs usually suffer from too high a base salary and too low a commission and incentive package. Each wholesaler should periodically review his supervisory compensation system to determine if the mix between salary, commission and incentive is correct. In my experience, I have found that a base salary of 50 to 75 percent of total compensation with remaining compensation comprised of commission and incentives works the best. The second common compensation problem is that the salespeople have reached their financial comfort level. If the salespeople are making enough money to be at their financial comfort level, it is very difficult for sales supervisors to motivate salespeople to achieve results above and beyond the current level of performance.

Again, it is management's responsibility to make sure the sales supervisors are not handcuffed by ineffective compensation systems. Instead of these systems helping the supervisors and sales management improve the salesforce, poorly designed compensation systems act as a hindrance to overall sales productivity.

Quotas

Quota systems are an effective tool at both the supervisory and individual salesperson level. It is not uncommon to find the salespeople working under a quota system, but it is rare to find the supervisors tied to a similar type of quota system. A sales supervisor should be under a quota system where his quota equals the sum total of the salespeople under his supervision. The quota system must be tied to his performance evaluation and tied to his compensation.

Quotas at the supervisory level and at the individual salesman level are an essential tool in helping make the sales supervisor more effective. It is management's responsibility to make sure this tool is available, effective, and most importantly, that it is utilized correctly. This will usually require a significant amount of training. The wholesaler must decide what he wants out of sales supervisors and the salespeople and make sure everyone involved understands what level of performance is expected. Upper-level management must make sure that the jobs are designed properly and that systems are in place to help make these people effective. Training must be provided at both the supervisory and salesforce level to make sure individuals are given both concepts and skills that enable them to achieve maximum performance. Once management has put everything in place, then it must resolve that it will not settle for anything less than maximum performance.

PHOTO : Joseph J. Verno is a founder managing partner of the Denver Management Group, Inc., a nationally-recognized management consulting firm to the beer wholesaling industry. Verno has served as a consultant to brewers and wholesalers and is a speaker at seminars and workshops throughout the U.S. For information about the Denver Management Group, call 1-800-777-6364.
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Title Annotation:1989 Statistical Study; brewing industry
Author:Verno, Joseph J.
Publication:Modern Brewery Age
Date:Mar 12, 1990
Words:2730
Previous Article:Going light.
Next Article:Associated Importers plans its 1990 strategies at annual meeting.
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