In today’s competitive marketplace sales organizations are often forced to re-engineer processes to ensure success. It has become clear that effectively servicing all accounts using field sales alone has become an economic impossibility. For most organizations, there are simply too many accounts to produce a positive ROI. Given that truth, it’s vital to ask the hard questions and constantly evaluate performance. If any of these signs of sales channel stress appear, then it is likely time to optimize your marketing methods to increase reach to maximize sales, decrease attrition, and lower the overall cost of sale.
1. Too many accounts assigned to each sales rep.
On average, a building products sales rep is assigned 100 or more accounts, but can only effectively manage and grow twenty to thirty accounts. The results of analytics performed on over 200 companies over the past 10 years has shown a clear “Rule of Thirds”. In this principle, the top one third of the average sales rep’s managed accounts performs very well – growing by double digits each year. The middle third is only managed occasionally, keeping performance flat. The bottom third is often neglected, resulting in average double digit attrition. In a field sales model, there is simply not enough time to reach all customers without support.
2. Accounts assigned to reps to justify a figure of dollars under management, rather than true ability to cover.
When reps are assigned too many accounts, this dynamic is often the reason. On paper, the philosophy of increasing rep assignment to reach a certain dollar value coverage maximizes the portfolio, but in reality, this causes attrition in the bottom accounts, and drives less than optimal management in high value accounts. This phenomenon causes time to be taken away from accounts that can be grown and spreads reps too thin, making it impossible to achieve optimal performance.
3. Large number of unassigned accounts that are not growing as fast as field managed accounts.
Another principle proven through long term analysis of companies is the 80/20 rule; which states that 80% of revenue is generated by the top 20% of customers. These 20% are high value customers and average double digit growth. On the other hand, low value, unassigned accounts average 15% attrition, occasionally reaching up to 40%. Often, this is caused by not truly analyzing sales data to understand the inequality between accounts, but sometimes is actually the result of a conscious decision to not focus on low value accounts because the economies of hiring sales staff to manage these accounts is unrealistic.
4. Lag in sales of new products or non-core accessories.
Distributors often see that sales of newly introduced products or high margin accessories don’t perform to expectations. This is often due to fragmented communication and an overreliance on field sales alone for education. The combination of field resources being able to truly cover only the largest accounts, and a primary focus on the best selling products can easily cause this to happen. To truly reach and educate all accounts, communication must come through multiple channels, or many accounts and/or decision makers will not be exposed to cross-sell and up-sell opportunities.
5. Over-reliance on field sales as the only channel of communications or management
While field sales reps are very effective in the highest value accounts where the most time is spent, a recent CEB study shows that B2B customers complete an average of 57% of their research through other channels, before engaging field sales. With that being the case, not rounding out your communications tool set with other channels, especially email and digital engagement can result in missed education and sales opportunities.
6. Lack of utilization of key support programs by customers
Very often, support programs such as rebates, loyalty and marketing assistance programs are underutilized in the B2B space. In one example, a client program matching a government funded rebate was being utilized by only a fraction of dealers. In another case, a loyalty program had 13,000 customers enrolled, but only 800 utilizing it. In both cases, after outreach to targeted customers, it was found that less than 15% of accounts were even aware of the existence or even their enrollment in these programs. These examples can be seen across the industry, and show that there is a systemic lack of process and resources to ensure that programs and their value are communicated to all customers consistently.
It is without question that a well managed field sales organization is key to the success of any product sales company, but it has become impossible to manage all accounts using field sales alone. Many companies see these signs of stress within their sales channels, and find that they must develop more effective and cost efficient ways of covering low value accounts and supporting field sales. When reps are spread too thin or have too much to do with every client, sales drop and attrition rises. Using alternate solutions such as multichannel marketing can help to optimize sales efforts, relieving the sales channel stress.