Here’s a potentially lethal sales process engineering error that we’ve made a number of times; and one that many of our subscribers have made — and are making right now — too!
The error is to attempt to increase opportunity flow to match your salesperson capacity. (It sounds innocuous enough but, like I said, it’s potentially lethal error.)
Let me begin by establishing some context.
You’ve recognised that your salespeople spend most of their time on activities that could be performed by less expensive resources.
Accordingly, you’ve applied division-of-labour, shifted the responsibility for all tasks other than business-development appointments to other resources and added the critical sales coordinators to schedule salespeople’s diaries (and to synchronise the performance of all those tasks).
As a result, your salespeople’s capacity has increased by at least an order of magnitude: from 2 business-development appointments a week to more than 20.
But to exploit this increase in capacity, you *must* increase opportunity flow. If you don’t, salespeople will spend 90% of their time sitting idle and — worse still — you have to fund the additional cost of the new sales coordinators and any other resources you may have added in order to off-load tasks from salespeople.
So, you increase opportunity flow, right? You run direct mail campaigns, place advertisements, give away information packs or copies of your manifesto and opportunities flood in.
Well, not exactly.
In most cases increasing opportunity flow takes quite some time.
Most organisations lack the irrefusable offers required to create responsive promotional campaigns. And virtually no organisations have the well-packaged ideology required to enable the rapid creation of a manifesto.
Both irrefusable offers and a well-packaged ideology require that the organisation has a clear competitive advantage.
In practice, this means either better technology (which requires a healthy new-product development process) or a price advantage (which requires an efficient production process).
The development of either, understandably, takes time.
If an organisation lacks a clear competitive advantage, it will have to spend a large amount on promotion to generate the necessary volume of sales opportunities. Worse still, it is likely to find that conversion rates diminish significantly when organic sales opportunities are supplemented with those generated from promotional campaigns.
But it actually gets worse. What the organisation is likely to find is that many of its salespeople are not particularly good at operating in this new environment.
In the past, salespeople have spent the greater majority of their time performing customer service, solution-design and clerical tasks. When they have sold, they’ve delt, almost exclusively with existing clients or referrals — where limited salesmanship has been required.
So now, this organisation is in a position where:
- Operating expenses are up (due to additional staff)
- Significant promotional expenditure is required (to stimulate opportunity flow)
- And conversion rates are in danger of dropping to unsustainable levels (due to unappealing offers and inexperienced salespeople)
Not a good position to be in!
So what’s the alternative?
The alternative is simple, obvious in retrospect and — in most cases — remarkably easy to implement.
The alternative is to reduce salesperson capacity to match organic (existing) opportunity flow.
Now, in most cases (but not all) this doesn’t mean retrenching salespeople.
What it does require is that you identify those one or two existing salespeople who will be comfortable performing nothing other than business-development appointments and transfer the other salespeople to other roles.
In most organisations, we turn most of the existing sales team into customer-service representatives, project leaders, sales engineers or similar.
This has the following effects:
The remaining salespeople are fully-loaded with business-development appointments from day one
With the new resources, customer service and project leadership improve immediately
With the reduction in size of the sales team, there now only a requirement for one or two sales coordinators
There is no immediate requirement for additional promotional expenditure
All of the existing opportunities are now managed by the best salespeople, meaning that conversion is likely to actually improve!
At this point, the sales process has been effectively reengineered.
Scheduling has been centralised. Division of labour has been applied. And the constraint has been firmly shifted to salespeople.
And all this has been accomplished without performing promotional miracles.
Now the organisation can take all the time it needs to improve new-product flow, to develop production efficiencies, to create irrefusable offers and to, ultimately, stimulate opportunity flow.
So, in summary, *never* attempt to match opportunity flow to salesperson capacity. Always do the opposite: first match salesperson capacity to existing opportunity flow and *only* add salespeople when you have the additional opportunities required to justify this increased operating expense.
Our rule of thumb for adding salespeople is this: if you can’t guarantee that a new salesperson will perform at least 20 appointments on his or her first week on the job, then do *not* add that person.