Cost Explosion In The Field Sales Force - Measures To Increase Efficiency

 Have you experienced a cost explosion in your field sales department? Many managers attending and/or arranging sales training courses for their team protest about the rising costs of their sales force. The following five instruments can help you get costs in face-to-face sales under control.

Incurred costs in face-to-face sales are escalating: experts estimate theses costs have risen by 200% over the last twenty years.  

If we look at the active working time of a sales person, the cost of a customer visit in certain branches is often between £250 and £400. Additionally, an increasing number of visits are obligatory in order to gain just one new customer.

The only way to get out of this cul-de-sac is to put into practice procedures to improve effectiveness. The following details give you an indication of the five most significant measures, which you can apply.

Account Management Programme

The principle on which this programme is based is that different sized customers should be dealt with differently. A capital goods corporation, for example, allows the office sales force to deal with all customers whose annual turnover is up to £300,000 instead of allowing these customers to be handled personally by the field sales force. The costs per customer contact dropped from £200 per appointment to £15 per call. The objective of implementing such a “small customer programme” is to care for these customers equally well but at a significantly lower cost.

Many companies have found that switching from face to face sales to telemarketing leads to an enhanced coverage of the market and as a result elevated revenue. A telesales person has more customer contact per day than a sales person in the field sales force.

The field sales capacity that is saved throughout this is invested into enhanced service for key customers (key accounts). 75% of all companies which have introduced key account management have been able to boost their market share and in so doing their turnover.

Lead Generation Programme

A good lead generation programme (a programme to gain enquiries) needs to meet the subsequent demands:

One acquisition track is not enough to get a satisfactory number of qualified enquiries.  Make sure there are several acquisition tracks, using, for example, mailings, trade fairs and sales department programmes.

Within your business there should be one sales person or division which is accountable for the organisation, coordination and monitoring of enquiries.
    
Make sure that you have a clear application outline for the “ideal enquiry”:
How suitable are our products for potential customers?
How great is income potential?
Is the enquirer a genuine potential customer?
Has the enquiry come from one of the decision makers in the customers company?

Clearly apportion accountability for processing enquiries. A possible way of doing this would, for example, be the allocation of enquiries according to customer branches or sales areas.

Ensure that the field sales force or telemarketing department follows up enquiries and orders consistently.

Assess your lead generation programme regularly. Suitable indicators consist of the number of external sales department visits up to a business deal, the proportion of enquiries, which lead to orders or the costs incurred by customer acquisition.

Computer Aided Selling

Introducing computer aided selling, according to expert opinion is the best way of increasing sales efficiency. Computer aided selling opens up a multitude of opportunities: sales area optimisation, turnover planning, client analysis, sales department evaluation system, order status analysis, electronic mailing system, competition analysis, tour planning, etc.

The introduction of computer aided selling can boost sales department efficiency by up to 40% and enhance sales-active time by up to 50%.

Determine which areas and/or tasks need to be targeted now before you introduce computer aided selling.

When doing this, concentrate on points, which offer your clients tangible advantages (eg, faster answering service or shorter delivery times).

Experience shows that you can expect costs of between £2,000 and £5,000 per sales person.  Make sure that your budget is not too small.

Telemarketing

In this area, experts predict an annual growth rate of 25%. Around 20% of industrial companies are currently using telemarketing.

When introducing telemarketing, bear in mind the following recommendations:

Expect opposition from your sales force, who will be apprehensive about job losses.
Hire specialised trainers to provide sales training for your employees.
Set clear revenue and profit targets.
Pay your telemarketing people the same performance related pay as your other salespeople.
Offer your telemarketing people promotional opportunities by creating the same hierarchy in telemarketing as you have in the field sales force.

Systems contracts

The delivery contract between customers and manufacturers is long term and agrees to an exchange of all information by data transfer.

This way, the field sales force moves from being an ‘order form writer’ to being a true sales person and can focus entirely on customer acquisition.

Offer systems contracts mainly for straightforward products with long life spans.

Make sure this is no more than 50% of your revenue and no more than 20% is solely from one customer’s systems contract. Or else, you will lose important customers and market contact.

Fix prices for a maximum of two years to allow for price fluctuations.

Negotiate a good long-term contract to ensure income stability. Ensure that the sales force is at ease negotiating and have received suitable sales training.   

Combine the systems contract with a 24-hour or 48 hour delivery service in order to make it appeal to your customers.

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