Article: Best of 2011: The Sales Factor - Opportunities & Trends

Strategic HR

Best of 2011: The Sales Factor - Opportunities & Trends

India's growth story lies in the immense potential of its growing domestic consumption, its 'demographic dividend' and its burgeoning middle class, which is an opportunity for retail products and services. The challenges companies in such industries face include extreme cost pressures driven by consumer price sensitivity, affordability of products and services for the loca
Best of 2011: The Sales Factor - Opportunities & Trends
 

Lack of talent and pressures of maintaining cost efficiencies has further led organisations to use alternate workforce models like Direct Sales Agents & staffing organizations

 

As the market is extremely competitive,your brand and your sales people need to be superior

 

India’s growth story lies in the immense potential of its growing domestic consumption, its ‘demographic dividend’ and its burgeoning middle class, which is an opportunity for retail products and services. The challenges companies in such industries face include extreme cost pressures driven by consumer price sensitivity, affordability of products and services for the local buyer and brutal competition between both domestic companies and entrant MNCs.

The cover story of April-May 2011 provided a snapshot of current sales structures, talent challenges and opportunities in building successful sales teams in FMCG, Consumer Durables, Telecom, Banking, Financial Services and Insurance (BFSI) and Pharmaceutical industries

The sales profession is highly challenging, yet a highly rewarding career for motivated individuals, with a superior understanding of the human psyche. For organizations, it is the critical X-factor, especially in consumer-focused industries like FMCG, consumer durables, telecom, BFSI and pharmaceuticals. The success of such industries is rooted in aligning the goals of the organization with those of employees and teams in the sales function, managing purpose-built sales channels.

While each industry has its nuances with regards to the sales process, there are loads of commonalities in terms of the skills and attitude that make sales teams mobile across these industries. When the telecom revolution started, it needed large numbers of people on the field to gain penetration and generate large revenues early on; it hired sales people from FMCG industry. Later, when insurance and financial services industries grew, they in turn, hired people from the telecom industry. One may argue if the core skills of product or service knowledge are secondary to the role of sales, or if companies just have to hire available talent and balance any misfits with a strong investment in training.

The pressures that new industries face, specially early entrants like telecom and BFSI, are huge as there are constraints in local pricing which limits their capacity to attract talent at affordable salaries. Also, competition for the customer is fierce, and pressures on top-line growth are very high. Quick revenues are needed to justify the huge investments made in the business in terms of infrastructure and capital requirements. Traditionally, FMCG and pharmaceutical are sales-oriented industries in India that are driven by reach. Reach beyond cities, to rural areas across India, be it shops or doctors, is the clear driver of business. Telecom, being a relatively new industry, has seen massive investments in infrastructure and licenses - hence speed of penetration, ability to acquire customers quicker than competition, and agility to implement innovation, are key drivers for their success.

BFSI requires a different set of talent - people who are more inclined to appreciating the financial needs of customers and is, arguably, the only industry where products are not sold, but bought and hence sales people require that indefinable soft trait of resilience. Being highly regulated industries, compliance plays an important role in pharmaceutical and BFSI, and this is fast gaining importance in telecom too. This story focuses on the challenges retail-focused industries face in India, the common trends and the key requirements to build successful teams for the future.

The talent challenges

Attrition, low productivity, and spiraling wage bills, are outcomes of a combination of factors from shrinking qualified talent pool, lack of measurement of talent performance and poaching within the industry and across industries. Productivity in these industries is largely a function of the collective sales capabilities which most companies are struggling to address. The talent challenges facing these industries are grave because of the direct correlation between lack of sales talent and loss of business outcome (revenue, penetration and reach). If organizations are to take advantage of the growth prospects that local consumer industries offer, they must address the challenges faced in managing sales teams.

Finding the right fit. Shortage of sales talent is at all levels and is exacerbated by the fact that the better talent has options outside the profession that provide better immediate pay, more comfortable (less hostile) working conditions and are socially more acceptable. Also, the peculiarities of selling to retail consumers – one which includes working undefined odd hours, like in insurance – adds to the problems as women, as a talent group, do not prefer such roles that demand odd working hours or the need to meet clients even at their residence, due to safety and security concerns. As a consequence, candidates available for sales jobs are like the ‘flotsam and jetsam’ of the employment market.

The leaking pipe. Attrition continues to be one of the highest contributors to productivity loss. Cost of attrition not only includes cost of hiring and subsequent training costs, but also includes intangible costs such as increased work burden on peers and resultant low morale. This is true to sales people, both at the entry and supervisory level, regardless of their performance. Attrition is highest in the first 3 months of joining as a result of inability to perform at the expected level, and later after 1 or 2 years, when many sales people feel a lack of career opportunities within the organization.

Reward for variability in performance. The effectiveness of sales incentive lies in the balance between cost and outcome. If the cost of the sales incentive plan is too high, companies usually resort to alternative plans (alternative distribution channels) to suit their affordability. If the outcome of the sales efforts is too high in relation to the incentive payout, it quite often leads to dissatisfaction and attrition. Further, if an incentive plan is ambiguous and complex, the sales person finds it difficult to calculate his expected payout against his achievements, which negates the purpose.

Managing careers, not jobs. There is inadequate planning in both horizontal and vertical growth prospects for sales people in organizations presently. The new generation employee has growing aspirations and high ambition and needs a fast-track and well-articulated career path. Sales-centric organizations need to cope with the challenge to provide the right platform to meet employee aspirations lest competitors allure their best talent with more lucrative offers.

‘Alexander or foot soldiers’ approach. Sales teams bifurcate sales people into three categories in terms of their performance: ‘A’ players who consistently outperform their peers by 25 to 30 percent; ‘B’ players who perform up to 90-100 percent of the target; and laggards, who constantly fail to meet their sales targets, and are gradually moved out. To optimize productivity, organizations need to adequately manage ‘A’ and ‘B’ category, while most companies tend to only focus on the ‘A’ players.

Scalability and reach. Success for these industries is dependent on their ability to reach and penetrate local markets before competing organizations do so. The direct relationship between reach and business outcome requires organizations to ensure there are adequate people on the ground to ensure scalable reach. Additionally, organizations face the challenge of maximizing reach without increasing the cost of talent.

The success formula

Great sales teams are a product of organizations that have a strong vision, and the right strategy to achieve that vision. Organizations that structure their activities around that vision, which is then translated into sales targets and objectives cascaded down, will see increasing sales performance that meets business requirements. For this, there must be adequate emphasis on the following action-points that organizations can simply not ignore:

Hire right (Success profile). Focus on identifying the ‘success profile’ for the target role. Define the set of competencies, personal attributes, skills and knowledge that will make a candidate a successful sales person in your organization and industry.

Induct and train right. Organizations must pay special attention to onboarding processes and training in the initial 2-3 months. Most attrition happens within the first 3 months as sales people, who are not able to perform, feel the pressure and decide to move out. So, emphasis on the first week and first month is crucial.

Reward right. A good R&R policy should have the optimum mix of cash incentives, bonuses, and formal recognition programs such as time with the CEO and senior leadership team. Incentive plans must be transparent and simple so that sales people are able to decipher the reward implications of their sales achievements.

Manage career and expectations. Managers must help individuals identify career paths based on their strengths. Some sales people may have the potential to move to managerial roles while others may not be inclined. Some top sales performers are perfectly happy continuing in front-line sales roles because they enjoy the constant sense of achievement and competition.

Lead right. Managers must develop their teams’ self-confidence through constant on-the-job coaching and leading by example. Once a good salesperson tastes success, s/he will develop the confidence to win increasingly tough and complex sales challenges, creating a self-feeding upward spiral.

Alternative options. Organizations can use alternative options like temporary (temp) staffing to ensure effective sales deployment to drive business imperatives. This enables organizations to have the right person for the right job with better fitment and hence higher productivity at an affordable cost.

The trends ahead

Building effective sales teams, while being a crucial element for business excellence, continues to be a challenge across industries. To optimize the exponential growth opportunity in retail-focused industries, the organization’s core objective will be to focus on maximizing reach and local penetration in order to maximize market share.

Where ‘people on the ground’ hold the key to business excellence and resultant increase in market share, managing sales talent is a business agenda that must be anchored by the top management. Going forward, organizations that make appropriate talent investments in sourcing the right talent, training and managing new talent aspirations, will stand to win.
The complexity of sales incentive plans in India will prove counter-productive if organizations do not make amendments as it will nullify the implication of the ‘pay for performance’ rule on business outcome. Organizations that can introduce a simple and transparent incentive plan will see much higher gains in sales as more users (sales people) will be able to identify the direct correlation between achievement and reward.

Along with these, effective sales teams will emerge stronger with the right support from HR, IT and marketing teams that will need to work in tandem to make the sales process successful. Managing sales targets, using the right sales measures and metrics, and developing strategies for distribution and trade relationships, are clear trends we foresee these industries taking up. Automation of the sales and distribution process led by the IT team will prove to be the required anchor for sales organizations to enhance scalability and reach of their products in the local market.
 

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Topics: Strategic HR, Performance Management

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