Sales Tactics for Dummies – Part Two

I’m still where I left you; on the tactical sales level, trying to take the right decisions when unplanned events happen.

Let’s look into that “correction system” I mentioned in my post Sales Tactics for Dummies – Part One that responds to deviations and provide help at hand for what to do when various events occur.

First: Definition. What do I mean by the term “Correction System”? I would say mainly two components;

  1. Tactical decision model for sales (discussed in this post)
  2. Software platform (will be discussed in a coming post)

Tactical decision model for sales

The essence of the question is to make better decisions when you face a sales tactics problem occurring from an unplanned event. In most countries today, decisions are made based on position – hierarchic – not consensus based, see illustration:

Hierarchic decision structure

The MD – Peter – has to be informed about the certain topic of the decision to make. If he’s not sure, he will ask the individual responsible in the management team.

In a sales perspective, let’s look at an example. During the monthly management team’s reporting session it appeared to Peter that a dramatic decrease in sales orders for the business area Automotive in EMEA has happened. Typically this issue is addressed to Kenny (Director Sales), who forward it to Brian (VP Sales EMEA), who in turn let George (Sales Manager Automotive EMEA) answer why the figures are dropping for the first quarter. George’s answer related to new competition that is raised in the area, proposing products with more features, lower price and sold by very nice commercials on TV. Brian documents George’s answer in an e-mail and sends it to Kenny. Kenny prepares a presentation where the answer is a part and in the next management meeting he briefs Peter and the rest of the team.

Peter then turns the question to Bruce (Director Product Development) if we are able to launch our new product earlier to match the competition we are facing. Peter also asks Emmy (Director Finance) what aspects she see lowering the price, Patty if we may downsize the supply chain and how flexible we can upgrade again if our actions have the wished impact and also, Peter asks the Director of marketing, Eve, what the cost is for a TV commercial and what result we could expect from it in lead generation. Several weeks later Peter make his decision based on these “silo answers”.

Did we miss any knowledge to make a better decision, such as:

  • Kenny stated a wished price level to get sales figures boosted
  • Eve states she could manage a nice TV commercials campaign and asks for the no of leads to be generated
  • Emmy says lowering the price will erode the margins
  • Peter supports not to lower the price – he has promised a high margin to the board
  • Bruce may say a new designed component will outperform the competition to a lower price
  • Emmy calculates the margin for new version and is satisfied
  • Peter approves the new price
  • Patty comments that component would have a longer delivery time
  • Eve wants to coordinate the sales boosting campaign with the product launch campaign
  • Emmy supports the coordinated campaigns; it will lower the costs
  • Patty comes back with delivery times and gets comments
    on them
  • Kenny states the no of leads he needs to be generated in the campaign to target the sales budgets
  • Danny sees synergies in using the same type of campaigns in his BA
  • ….etc

Collaborative decision structure

By this, Peter had full control over many views at the same time and came to this decision:

“We stress to launch our new product ASAP, but we need to wait for the new component that gives us the possibility to lower our price. That means we launch a sales boosting campaign coordinated with our product launch. Our BA Energy gets full details to run similar campaigns for lowering our total marketing costs for the entire company and higher output results. Decision Made”.

As you can see, it’s an iterative process and the social discussion moves the decision forward. Since Peter received knowledge from all his team members and by incorporating the discussion between the members he permits a well founded decision to evolve. It’s a Collaborative Decision Making model.

The history of Collaborative Decision Making goes down decades ago and today Gartner points out Collaborative Decision Making (CDM) will change the way we interact with information (see Hype Cycle for Business Intelligence, 2011), even if it will take a while: “…but require a significant cultural change for this technology to be widely adopted…” (Gartner 2011).

The Collaborative Decision Making model fits perfectly into a sales organization, since it improves the quality, transparency and auditability of tactical sales and marketing decisions by bringing together the right decision makers and their knowledge, brainstorm among specific scenarios and appoint the best of the scenarios to go for, and finally, see the impact the scenario has and form the action plan based upon it.

Like Gartner mentioned, it’s a cultural change in ways decisions are made. There are drawbacks of Collaborative Decision Making, but I think the globalization and harder competition will drive the process in this direction. You need to act more agile on events that happens “outside” your plan and there are no room for mistakes or bad founded decisions – often you only get one chance when events happen.

If you go for a Collaborative style in tactical sales decisions, you may be interested in my next blog post where I would like to discuss what support software platform you need to manage it.

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Until then, take care.

/Stefan

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Sales Tactics for Dummies – Part One

In The Sales Process Blog we have previously written about the background to why sales targets look like they do. We have also connected the strategic sales objectives to operational sales activities; what should be done daily, weekly, or monthly by each individual sales rep using the Sales Scenario Tool:

 Sales Scenario Tool

We have been discussing the background to why the operational sales targets says, for example ten customer visits a week and not eight or twelve.

Strategic goals are usually several-year horizon, usually three years. Based on these, you can then break down targets on an annual basis and then connect what outcome you can adopt a year and per sales rep, which becomes the basis of a compensation plan or salary policy. The method creates a driving force on sales rep level to achieve their individual goals, partly thanks to the strong wallet connection.

It’s easy. Set strategic objectives, link them to an operational compensation plan and both management and sales reps are happy because goals will be met.

Now. We all know that reality does not look that way. Things will happen over time. There is a saying that says “if things can go wrong, they tend to do exactly that.”

Let’s look at an example. In the beginning of May you may note that your sales targets are not reached this week. Your sales force conducted an average of only eight customer visits per rep instead of budgeted ten. That means they have to make twelve visits next week to catch up. The problem is that they only performed seven previous week, seven the week before last week and seven visits the week before that. That means you the past four weeks have lost eleven visits in total.

To catch up with your budget and secure your wallet will not be drained, you must then book eleven (your slip) plus ten new visit next week, a total of twenty-one (21) visits.
It is probably impossible; it’s more than the double of the budgeted.

So, what can you do when you find yourself missing the sales targets?

Sometimes it may help using the whip and just run faster – just be sure that there isn’t a ditch ahead, or a precipice or rock wall.

But we at Sales Scenario are sure there will be smarter ways than only run faster, even if that is a component in the discussion. We also believe you need a way or method that prevents the error from occurring – a kind of “correction system” that responds to deviations and provide help at hand for what to do when various events occur – at the tactical level.

You may describe the tactical level like managing events that you did not see or could not take any account of when you described our sales strategy or set your strategic goals.

Tactical level

Such events may be, for example, a news report that suddenly made people reluctant to products in your portfolio. Or raised interest rate for investments or the announcement of a major shutdown of an industry in your town that made people not inclined to spend money. Or…It’s like I said; things will really happen that have an impact on your sales life – positively or negatively

In coming posts we would like to present various examples of events on tactical level that may occur, what actions would be best practice to take into consideration and, finally, what tools may be used for help. In other words, how a sales tactics correction system could be managed.

BR/Stefan