The following is an excerpt from
Building a Winning Sales Force: Powerful Strategies for Driving High Performance by Andris A. Zoltners, Prabhakant Sinha and Sally E. Lorimer. Zoltners, a professor of marketing at the Kellogg School of Management, and Sinha founded ZS Associates in 1983. Lorimer is a business writer and an independent sales and marketing consultant.
The GE Story: Improving Sales Force Effectiveness Across Businesses
Many companies with large sales forces have initiated cross-divisional and worldwide programs to enhance their effectiveness. While these initiatives have not been uniformly successful, many of the successes have had a dramatic bottom-line impact.
GE is an excellent example of a company that has had considerable success in implementing a cross-organizational initiative aimed at enhancing the global effectiveness of its sales forces. Drawing on two of GE’s traditional strengths—a process orientation and an ability to develop and implement management ideas—the company has made substantial investments in enhancing global sales force effectiveness, beginning in 2006. Just two years later, benefits from this investment had already been realized in all six of GE’s major businesses and on six continents.A Commitment to Growth Brings a Need for Commercial Excellence
In September 2001, Jeffrey Immelt succeeded Jack Welch as chairman and CEO of GE. In a world stunned by the events of September 11, 2001, Immelt’s challenge was to take the fine-tuned productivity machine that GE had become and continue moving it forward. He set ambitious goals for sustaining organic growth, with the aim of growing existing GE businesses organically two to three times faster than the increase in world GDP. Achieving this would require GE to develop a more global, diverse, and customer-driven culture.
Immelt’s plan had six components, one of which was a commitment to “commercial excellence.” Achieving commercial excellence required putting talented sales and marketing leadership in place and developing a world-class sales and marketing organization. Building on GE’s strength as a process-driven organization, the company set out to create consistent processes and methodologies for sales and marketing decision-making that would enable the company to draw new revenue streams from existing businesses.
A look around at the various GE businesses led to an interesting insight. Those that had been most successful at driving organic growth over the previous several years were those that had been effective at utilizing data, analyses, processes, and tools to help with sales force decision-making. Consequently, GE’s commitment to commercial excellence would require bringing a more scientific approach to sales and marketing decision-making and applying that approach more consistently across businesses.Bringing Science to Sales and Marketing
With the hiring of Dan Henson as chief marketing officer in January 2006, the final piece needed to get GE’s commercial excellence initiative up and running was in place. Dan believed that technical depth and focus were needed to create the discipline and rigor required for success, and he chose three initial areas of focus. He appointed a global director at the corporate level to oversee each of the three areas: go-to-market segmentation, pricing, and sales force effectiveness (SFE). The three directors were charged with bringing commercial excellence to their respective areas.
They would do it by:
• Developing a consistent set of frameworks, models, capabilities, and best practices to be used by all GE businesses;
• Propagating best practices across the GE portfolio of businesses through training and education;
• Serving as a resource for GE businesses by providing wisdom, experience, and project team members who could help businesses execute the frameworks;
• Continually improving the frameworks, models, and approaches in order to ensure ongoing progress in global commercial excellence.A Focus on Sales Force Effectiveness Improvement
To implement the sales force effectiveness component of the commercial excellence vision, the company appointed Kevin Decker as director of commercial excellence, with responsibility for global sales force effectiveness. Kevin’s team had an ambitious mission: to develop and continually enhance frameworks and best practices for improving sales force effectiveness while propagating the ideas across all the GE businesses and providing resources to help the businesses turn the ideas into reality.
To provide focus for GE’s global sales force effectiveness (SFE) effort, a framework was established defining four SFE priorities and three delivery mechanisms that could make them live. By providing carefully thought-out frameworks with steps broken down into executable pieces, along with the necessary resources and support, the global SFE initiative allows GE businesses to embrace the new approaches and put them to work quickly to start enhancing sales force effectiveness.Four Sales Force Effectiveness Priorities
The four SFE areas selected as initial priorities for GE go hand in hand, as one area flows logically into the next. For each of the four SFE priorities, GE has established frameworks, tools, and best practices to be used as a guide by all GE businesses. These approaches have been synthesized from what the best businesses had been doing already, as well as from the approaches suggested by leading academics and consultants from outside GE.
The approaches, documented in best practices manuals, are continually enhanced and improved as new learning takes place. • Customer Potential and Prioritization:
A logical first step for enhancing sales force effectiveness is to understand market potential—the backbone of GE’s four SFE areas. If salespeople know the potential of their customers and prospects, they can allocate their time more effectively. Market potential is also necessary for designing good sales territories, setting fair sales targets, and designing variable incentive compensation programs that pay for performance.• Territory Alignment:
Territory alignment has an impact on a sales organization’s performance by influencing the efficiency of customer coverage and by affecting salespeople’s opportunity to create sales. The goal of territory alignment at GE is to identify coverage gaps by comparing customer workload, potential, and density across territories and to recommend territory alignment changes that can enhance sales force effectiveness. • Target Setting with Potentialization:
Territory sales or profit targets that acknowledge differences in territory potential help a sales organization to better identify performance variation across salespeople and create variable incentive compensation plans that pay for performance. The goal of target setting with potentialization at GE is to determine territory sales targets based on the best-performing salespeople in each market size category. • Variable Incentive Compensation:
Variable incentive compensation plans that pay for performance and create a clear linkage between activity and income are likely to motivate the highest levels of sales force effort. The SFE initiative aimed at variable incentive compensation at GE involves performing an assessment of the variable incentive compensation plan design to ensure that the plan pays for performance, evaluating the strength of payout controls, and building a communication plan for implementing successful plan changes. Three Sales Force Effectiveness Delivery Mechanisms
To ensure that the frameworks, tools, and best practices developed for each of the four SFE priority areas took root within GE and became well engrained into the sales culture, company leaders developed delivery mechanisms to propagate the ideas to the GE businesses.
• Sales Leader Capability Guide. The Sales Leader Capability Guide describes what GE expects its 5,800-plus sales managers to do. It identifies and defines the capabilities that are necessary to be successful as a GE sales manager, across the portfolio of businesses.
• Education: Essentials of Sales Management. Another delivery mechanism used to propagate sales force effectiveness throughout GE is sales management training. The company makes available a course titled Essentials of Sales Management and encourages all GE sales managers to take it, with the intent of exposing new managers to the course as quickly as possible. The course teaches managers ways in which to execute the most critical of the capabilities included in the Sales Leader Capability Guide. The training provides a strong foundation for successful sales management that is heavily rooted in improving sales force effectiveness.
• Sales Force Effectiveness Projects. The final sales force effectiveness delivery mechanism is the execution of projects within GE businesses. Projects focus on the four priority SFE areas: customer potential and prioritization, territory alignment, target setting with potentialization, and variable incentive compensation. Through these projects, information that is communicated through the training course and in the Sales Leader Capability Guide is applied tactically in the businesses, typically creating significant tangible gains in sales force effectiveness.
• Improving customer targeting and territory alignment for GE Healthcare Financial Services: Vendor and Practice Solutions team. GE Healthcare Financial Services provides capital, financial solutions, and related services for the global health-care market. The Vendor and Practice Solutions team partners with non-GE manufacturers and distributors of dental, medical, optical, and veterinary equipment (called “vendor partners”) to provide financing solutions for the vendor partners’ customers.
The GE sales force has approximately 60 field salespeople in the United States who work directly with vendor partners’ sales reps, training them in how to sell GE financing, providing financing expertise, and helping them close specific deals with their customers. An inside sales team supplements the efforts of the field salespeople.
With a goal of increasing market penetration, the sales organization conducted a sales force effectiveness project under the leadership of Dean DeStazio, sales force effectiveness manager for GE Healthcare Financial Services. The project focused on one of GE’s two large dental equipment vendor partners.
The project’s aim was to better understand market potential at the vendor partner’s customer level so that the market potential of each of the vendor partner’s sales reps could be evaluated. This would allow the GE sales team to be more strategic about which vendor partner sales reps it spent time with, and would also help the sales organization better align sales territories with market potential.The project had two main phases:
• Customer potential and prioritization. A customer database was created, incorporating information obtained from the vendor partner on equipment sales and installations with dentists, market demographics (such as population density and number of dental practices), and GE’s own sales data showing GE-funded volume. The database permitted a better evaluation of the potential of each vendor sales rep, allowing GE salespeople to see opportunities to grow their business and to identify more effective ways to spend their time. The data also helped GE identify ways to utilize inside salespeople to serve lower-potential vendor sales reps.
• Territory alignment. The customer potential and prioritization data were integrated with additional market demographic data and mapping tools to allow GE to evaluate territory alignments and identify coverage gaps in terms of customer quality and density. Based on this analysis, two territories were collapsed in areas where market potential was low and customers could be served more efficiently by other GE salespeople.
This project not only helped the GE Vendor and Practice Solutions team improve market penetration, but also helped the vendor partner gain a better understanding of its customers and market potential—a clear example of GE bringing commercial excellence to its customers.How GE’s Corporate Initiative Benefits GE Businesses
Just two years into the project, GE’s cross-organizational initiative to enhance global sales force effectiveness has had many benefits for GE’s businesses. Business leaders describe the many advantages of having global corporate support for SFE, including:• Strategic frameworks:
The comprehensive strategic framework developed by the corporate SFE team suggests a compelling and logical order for addressing issues and linking decisions back to business strategies.• Corporate voice:
Having corporate support behind SFE projects engages business leaders and facilitates decision-making.• Experience:
Corporate SFE team members have broad exposure and are skilled at applying the frameworks and tools, enabling them to mentor and guide projects effectively.• Resources and tools:
The corporate SFE team has developed proven approaches and tools that individual GE businesses do not have the time or resources to develop. • Best practices sharing:
The corporate SFE team can identify and share best practices across businesses worldwide, offering a unique and valuable perspective for enhancing sales force effectiveness across the portfolio.
GE’s global sales force effectiveness initiative has succeeded for many reasons. The company has backed up its promise to increase sales force effectiveness by committing the resources needed to make the promise a reality. Under the leadership of Kevin Decker, the company has developed the capabilities and established the frameworks necessary to bring the needed rigor to the SFE enhancement process.
Delivery mechanisms are in place, allowing GE businesses around the world to link successfully with the best practices and resources of the corporate SFE team. Sales force effectiveness is an important element of GE’s commitment to commercial excellence and its quest for continued organic growth.Excerpted from
Building a Winning Sales Force: Powerful Strategies for Driving High Performance by Andris A. Zolners, Prabhakant Sinha and Sally E. Lorimer.
All rights reserved. Published by AMACOM Books, a division of the American Management Association. The book is available online or at your local bookstore.