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Training Products Company
The organization was a medium-sized training product company selling in the business-to-business marketplace with annual revenues of $10.5 million. The Company's sales force consisted of 23 outbound telesales representatives who handled both outbound and inbound calls. Each telesales representative averaged sales of $163,000 annually. There was a wide disparity between the top salespeople and the poorest performers. In addition, management was continually concerned about any possible departure of their best-performing salespeople.
The Company also had a cataloging operation that supported both their lower and higher price point products. The Company mailed approximately 1.5 million catalogs per year to support the lower price point products and 600,000 catalogs per year to support the higher price point products. Revenues and profits were fairly flat. The owner of the organization wanted to position the Company for sale within the next two years and set a high multiple of earnings as his target price. To achieve this price, the organization would need double-digit earnings and revenue growth.
At the beginning of the effort, an audit was conducted to determine strategies and tactics that were appropriate in this situation. The audit revealed:
- Acquiring new customers of the higher price point product was proving difficult for the Company.
- Catalog response dropped off dramatically after a few outside lists were used.
- Outbound telemarketing for new customer acquisition was expensive, unmonitored and unstructured.
- The list selection techniques for the lower price point catalog were undeveloped and the coordination between the units was strained.
The sales department had lower than world-class productivity; the average number of outbound calls was 35 per day with a daily phone time requirement of 66 minutes. The outbound representatives were receiving inbound calls for the higher price point product from the receptionist, and the lower price point orders were sent directly to customer service representatives in a different department. Monitoring of daily activities within the sales group was sporadic and financial goals were not tied to daily activities.
At the inception of this initiative, the marketing department consisted of a four-person graphic art team, a list selection person, a copywriter and a coordinator. The creative work for the lower price point catalog was outsourced.
The results of the audit were presented to ownership along with detailed recommendations for an initiative to produce the earnings and growth desired to meet their objectives.
The audit showed that purchasers of the lower price product were excellent prospects for the higher priced products. In fact, the lower priced point customers were the best-performing list, second only to the house file for the higher price point customers.
The marketing department was reorganized to bring the lower price point effort in-house and to develop this effort as a lead generation and new customer acquisition engine for the higher price point product. To implement this strategy, the list selection techniques were upgraded to statistical analysis and an aggressive testing strategy was used. Quantities were increased until the Company was mailing 900,000 catalogs every two months, about 31/2 times the previously mailed quantity.
The catalog supporting the higher priced product was revamped using the audited results. Testing revealed that the highest response catalogs featured the telephone salespeople on the cover. Focus groups revealed the importance of establishing a “trusted advisor” status between the customer of the higher price point product and the salesperson because of the importance in matching a product with a specific need. To support these findings the marketing department created “one sheets” of each salesperson to use as sales collateral. The one sheets showed a color photograph of the salesperson engaged in one of his or her favorite hobbies/pastimes, but dressed in business attire. A brief paragraph outlined the salesperson's experience in the training industry and how they have helped their clients reach their organizational goals.
The covers of the company's product catalogs were re-designed, showing a photograph of 3-4 salespeople with headline copy that assured customers they would be talking with a trusted advisor who was knowledgeable in their specific industry. Four to six of the “hobby” photos were also scattered throughout the company's product catalog. These photographs broke up the product-heavy pages and gave the catalog a warm, friendly feel that lent a great deal of credibility to the product offering. In addition, quantities of the higher price point catalog were reduced from 150,000 to 100,000 per mailing to fit lists that were most responsive.
The audit revealed a low proportion of multiple sales. In response, the marketing department launched a “One-Stop Shop” branding campaign for general advertising, packaging and promotions, developed sales support collateral and created a Lending Library initiative tailored for large organizations with the need to purchase or rent large volumes of training products. The Lending Library products were promoted within the customer's organization and available at reduced prices, based on large volume sales and rentals. The Company estimated sales for these Lending Library programs would reach $250,000 to $400,000 annually.
Marketing promotions were scheduled on a six-month basis and were coordinated with the inbound team and outbound sales group. Response projections were created as part of the budget cycle and results were compared to plan and used to benchmark future promotions. New initiatives, including e-mail marketing, a new website strategy and non-catalog promotions were added to marketing's responsibilities. An innovative opt-in e-mail newsletter program was used to spark customer enthusiasm for new products and suggest new uses of existing products.
The audit revealed that six people within the company were performing customer service functions but were not centrally organized, monitored or controlled. An inbound call center was organized for these individuals and was charged with taking orders for the lower price point product and for taking calls for the higher price point product. (These calls had previously been given directly to the outbound sales group.) This freed the outbound sales representatives from being constantly interrupted to perform customer service tasks. The inbound call center was also used to handle the Lending Library program orders, again freeing up the salespeople to concentrate on larger opportunities.
With the outbound sales group freed from customer service activities and much of their customer acquisition responsibilities, their focus was shifted to raising sales productivity by increasing the volume of sales for each salesperson.
The audit revealed that daily activity was not world class. Over an 18-month period, the number of outbound telephone calls required per salesperson was increased from 35 calls to 60 calls per day and the amount of phone time was increased from 66 minutes to 145 minutes per day.
Sales targets were worked in reverse to calculate daily activities. Customers previewed the Company's higher price point products before they were purchased. A predictable percentage of these previews converted to sales, and it took a predictable number of outbound phone calls to gain a qualified preview. These and other measures were worked backwards to determine the daily activities required of the sales group.
Individual targets for each salesperson were determined and set. The sales managers held one-on-one meetings with each salesperson every six months to set sales and activity goals and to create a Personal Salesperson Business Plan detailing expectations and results. The goal was not simply to communicate—but to achieve the salesperson's buy-in of how the numbers were calculated, how goals were assigned and their personal role in helping the Company achieve its objectives.
A sales coach was recruited and charged with reviewing daily activities with the salespeople including reviewing customer notes, comparing daily call logs and phone time reports with expected activities and coaching the salespeople through difficult and complex sales. The sales coach was not the sales manager, but an assistant manager charged with motivating the salespeople and holding them accountable for the daily activities outlined in their individual plans.
A campaign to sell multiple products was introduced. This campaign worked in conjunction with the Lending Library initiative developed by marketing. The campaign included the creation of individual binders for each of the salespeople explaining how to promote and close a multiple sale, pricing schedules and methods for proposing and closing customers.
The Company developed a Sales Training Program around multiple sales and Lending Libraries and rolled it out to the entire sales group and inbound call center staff.
The audit also pointed out an opportunity to reconfigure territories. Sales territories were historically configured by geographical designation within industries. For example, a certain salesperson would have manufacturing companies within the states of New York, Indiana, Illinois, Ohio and Pennsylvania. A change was made to organize territories by alphabet within industries. This enabled the inbound call center to quickly determine the appropriate salesperson. Further, this change allowed the company to push for multiple sales from spanning states at the corporate level. The change also dramatically reduced the crossover situations between salespeople that previously sparked animosity amongst the sales group.
Over the course of the two-year initiative, world-class activity goals were met, average salesperson compensation was stable and per salesperson sales rose from $163,000 annually to $360,000 annually. Turnover was exceptionally light within the sales group, averaging about 20% less per year than what was previously experienced.
Over the two-year period of the initiative, the Company transitioned from an informal sales system to a formal sales system. Where previous marketing and sales decisions had been made anecdotally, they now were data driven with measurements and accountability in place. Where there was a large difference between the best and poorest performing salespeople, that gap was narrowed. Where it was apparent that the salespeople owned the customers at the beginning of the initiative, the company firmly owned the sales system at the end of the initiative and was far less vulnerable to defections in the sales group.
The idea of sales system ownership is central to Business Performance Group's consulting, training and services philosophy. Investments in the system add to ownership's equity in the business and provide a long-term return on investment, lowering the cost-of-sales. The cost of turnover in the sales group is also reduced because more of the sales equity remains with the organization rather than leaving with any departing salespeople.
Audits are a key tool providing management with a clear vision of where they are against best in class, to plan, budget and benchmark improvement efforts. When benchmarks are established, the measurement of daily activities necessary to accomplish a revenue objective will provide a clear roadmap towards targets and plan.
At the end of the two-year campaign, the Company had grown to $18.5 million in annual sales with profits and revenues growing at double-digit rates. The owner sold the Company for his target price.
Business Performance Group can help your company better connect with prospects and customers! Call us today at 1.866.440.5964 for more information.