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About the Author ChannelCorp Workshops
2.4 Sales Productivity DevelopmentReseller salesforces have been hard hit by falling ASP and falling margin %. Many salespeople, being paid on gross margin dollars generated, are finding it more and more difficult to hit the numbers. Some salespeople have figured it out. What do the top 10% salespeople know that the rest of reseller salespeople should know? This chapter will illuminate the best practices of the best reseller sales operations.
Figure 179 - Where does the time go Paperwork and waiting eat up a tremendous amount of time in the life of the average reseller salesperson. Productivity Figure 180 - Target revenue/salesperson productivity levels Figure 180 shows how much revenue per salesperson (on average) has to be generated to hit various revenue/person targets in the business. When one compares the targets with the amount of face time an average salesperson can muster, the required revenue/hour to be generated becomes huge (Figure 181). Figure 181 -Target revenue/hour productivity levels The average salesperson (400 hours of face time per year) in a reseller targeting $225,000 in revenue/employee must sell $2,812.00 per hour of face time, or about $46.86 per minute. As transaction yields fall, the productivity numbers will continue to rise and rise. New approaches Figure 182 - Not all accounts are profitable The biggest accounts create the largest transaction yields. They can support the largest transaction costs and still show a profit. Unfortunately, the numbers of these accounts that most resellers possess is small and the absolute number is shrinking. The medium size accounts are growing as a percentage of total accounts. Many of the medium-sized accounts are not profitable or are marginally profitable. As the number of non-profitable accounts grows, the overall profitability of the business drops. Eventually, non-profitable accounts dominate the results and the business fails. In order to match transaction costs with transaction yields, resellers are adding direct mail, telesales and Internet-based on-line sales capabilities to their strategies. Depicted below are the relationships between yields, costs and sales methods (Figure 183). Figure 183 - Structure to match costs to needs By understanding transaction costs and transaction yields, and by creating a variety of lower cost methods of processing revenue, resellers are transforming unprofitable business into profitable business. As a by-product, levels of customer satisfaction are also rising. Emerging structures Figure 184 - Model #1 - Pairs Model #1 (Figure 184) pairs an account manager with a telesales rep. The account manager is the team leader and directs the telesales rep to manage the small/medium size accounts that are not profitable to process on a direct sales basis. The compensation of both the account manager and the telesales rep are tied together and driven by gross margin dollars. The client coverage of Model #1 may look as follows (assume the pair handles 100 accounts between them) (Figure 185). Figure 185 - Pairs - Account Coverage
Figure 186 - Model#2 - Troikas
The Model #2 (Figure 186) replicates the first model and then adds an administrative assistant as a third, lower cost capability to process the smallest accounts and sell services and supplies. The client coverage of Model #2 may look as follows (assume the three handle 300 accounts between them) (Figure 187). Figure 187- Troikas - Account Coverage As in the first model, the account manager is the team leader and the compensation systems are tied together to make all three persons function as a team. Directions Prospect quality is a marketing problem that sales has to live with. The best in the business have taken steps to redefine roles between sales and marketing, invested in dedicated marketing talent, built marketing machines, and established high quality websites. Too little face time is a sales problem. The best of the best are structurally changing the way that they are processing revenue. Low yield transactions are being processed by low cost sales methods. Less expensive resources such as telesales reps and administrative assistants are being hired to free up more face time for the account managers. The structural changes in the reseller industry have finally caught
up to the sales function. Figure 188 - Two critical problems - salesforce productivity Increases in sales productivity requires an integrated approach to marketing and sales. Amounts of face time need to increase. Productivity needs to increase and new approaches are required. Prospect quality and face time are increased by integrated sales and marketing. The next section focuses on how to increase financial performance.
ChannelCorp Consulting services ChannelCorps’s management consulting expertise is built on a solid foundation of fifteen years of researching and analyzing the evolving business models and marketing strategies of the vendor and solution providers worldwide. Suggested Reading Availability For information on republication, contact Bruce Stuart - channelcorp@telus.net Back to ChannelCorp Intelligence |
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