When Megara – a Melbourne (Australia) based manufacturer of polypropylene products – was contemplating radical changes to the design of their sales function, a list of concerns was identified:
- Would customers be happy dealing (by phone, rather than face-to-face) with account managers who were located in another region?
- Would customers tolerate the requirement to interact with multiple specialists – rather than with a single generalist?
- Would customers be comfortable with the idea of an assistant scheduling meetings for a field-based salesperson?
- Would telephone contact be as effective as face-to-face in most selling situations?
Today, only a few months on, the results are in. And, without exception, the answer to each of the questions above is YES.
Something had to change
As Andrew explains in the video below, the decision to reengineer sales was not one that the Megara management team took lightly. The team was well aware of the magnitude of the changes – and the associated risks – the new direction entailed.
But, there was no question that the standard model was broken. Attempts to grow revenue by building-out the sales team (11 salespeople and an experienced sales manager) had failed. In the wake of that failure, the maintenance of the status quo was starting to feel like a more radical option than the Sales Process Engineering message espoused in the workshops the Megara team had been attending!
Today, in place of 11 field-based salespeople (and one sales manager), Megara has the following specialist functions:
- Inside sales: a team of head-office based account managers (all accounts and opportunities are now owned by internal personnel)
- Business-development manager: in the near-term, this (field-based) role will be filled by Andrew, who will dedicate two days a week to new-account acquisition
- Sales coordinator: essentially the business-development manager’s executive assistant
- Field-based project leaders: these are technical experts who support both the inside sales team and the business-development manager
- Estimating: while this wasn’t in our original plan, we quickly discovered that the volume of RFQ’s warranted a team of dedicated estimators
- Customer service: issue management and the processing of simple transactions
The length of that list disguises the effect that the transition has had on both headcount and payroll costs.
Megara’s sales and sales support team has actually reduced in size by 4 people. And payroll costs for the sales function have reduced by around 30%! Furthermore, Megara has, as a result of the changes, been able to close two regional offices.
Of course, all this is a pyrrhic victory if the reduction in costs is associated with a reduction in sales activity (or customer service quality). But the opposite is the case. In all areas of the business (except business-development) there has been a marked increase in sales activity (in absolute terms). And every indication is that customer service quality is up too.
What didn’t work?
As the opening of this story suggests, in our initial planning, we made a lot of good calls. But we made a few bad ones too.
Estimating is a good example. We started with some assumptions about the estimating load and we quickly discovered that we had under-stated it. So, we did a time-and-motion study to determine the extent of it – but, even then, we got it wrong. At one point it felt like every person in the organization was estimating (some of them, 24 hours a day)!
Eventually, we were forced to recognize that the problem was much bigger than our incremental approaches to solving it. In response, we took two of Megara’s most valuable inside sales and technical resources and turned them into a dedicated estimating department. That solved the estimating problem, almost overnight, but it left the account-management team a little thin on the ground. Fortunately, resourcing-up this function turned out to be easier than we expected.
We had a slow start with Project Leaders too. On day-one we assumed that most of their work would relate to business development and, consequently, had them working closely with the Sales Coordinator. This instantly overwhelmed our Sales Coordinator and caused new-account acquisition to grind to a halt. We solved this problem by converting Project Leaders into a field resource for the account management team (on call for business-development, when required) – but the cost was a slow start to business development.
Another issue (and this is a common one) was that we underestimated the effort associated with the commencement of promotional campaigns. It’s not that any of the parts of promotion are particularly complex – it’s more that there are so many parts and they all have to move together.
You need offers and creative. You need lists – and, in most cases, you can’t buy these, you have to research them. And you need special technology: landing pages, email broadcast capabilities, the ability to run complex queries on your house list and the ability to batch-generate sales opportunities, just for starters! Then, when you have all the parts, you need people with the focus – and time – to execute the long sequence of tasks, stretching from the origination of an offer to the scheduling of field appointments.
And that brings us to the future.
As Andrew mentions in the video, new-account acquisition is our current focus now that the rest of the machine is in place and operating well. The good news is that we have proof of concept for all of the components of this initiative. At the start of the transition, Andrew seized the initiative and stepped into the business-development role himself for a little while. As a consequence, he proved that splitting sales tasks between a field representative and a sales coordinator works great. Also, some of our halting promotional experiments over the last few months have been surprisingly successful – suggesting that the promotional challenge is, to a large part, mechanical!
If you haven’t already done so, watch the video above. If you have questions, ask them in the comment section of the blog post. I’m sure Andrew will be happy to weigh in with answers. And, while you’re at it, be sure to thank Andrew for sharing his story so openly, as I will now.
Thank you Andrew!