In the tough economic environment today, sales departments in the Middle East are facing immense challenges stemming from demands for higher revenue growth and cost efficiency. Mature sales structures are being put to the test everywhere. Large corporations and mid-sized firms are striving to improve their sales excellence in order to profit even more from the sales side. The ideal sales organization may look different depending on the industry and company, but a sales optimization always involves five components:
- Sales Strategy Set your priorities right: putting the right sales targets and budgets in place can only be done when you are fully knowledgeable of the strategic importance of markets and customer segments. Yet this knowledge is often what’s missing: at a manufacturer of machine tools, the head of sales saw India as the most important future market. The vice-head of sales, however, felt that international marketing for highly complex specialty products was the most important aspect. To set their priorities, all product and customer segments including sales regions were analyzed according to attractiveness, competitiveness and positioning advantages for the company. The result: while India posed the greatest potential, the company had a weak presence there. In terms of specialty products, however, the company was a world market leader. As a consequence, the company set for both markets diverse, but specific and well coordinated sales strategies and targets.
- Market Approach Ensure growth with the best possible market development: What is the best mixture of direct and indirect as well as physical and digital sales channels? The machine tool manufacturer decided to build its own sales subsidiaries in core markets while deploying agents in India for the time being to penetrate the market most efficiently. The sales managers discovered even more growth potential in a deeper analysis: the market volume of all offers and won contracts were compared for all parts markets. In one region, the sales team took part in almost 90 percent of all tender processes, but they won less than 15 percent of them. An enhanced approach to assessing and prioritizing inquiries considerably increased the rate of closed deals within a short time.
- Structure Is Key Create sales structure efficiency with the right sales organization: How many hunters and farmers does your sales organization need? What about key account managers and in-house sales? How should responsibilities and interfaces be organized? The sales organization of a logistics provider had grown disorganized over time and was quite inefficient. The sales organization benefited greatly from re-classifying its A/B/C customers in sales. It also systematically transferred D customers to in-house sales and ensured that several hunters focused more strongly on customer acquisitions. At the same time, sales processes were revised to give the sales force more time for core sales activities. Before this, they spent too much time on administrative tasks such as filling out forms about customer visits.
- Margin Management Boost profitability with the right prices: Your typical sales rep pays great attention to the number of closed deals, but the profitability of orders is often neglected. As a result, a screw manufacturer decided to revise its discount system for small and mid-sized customers. Compulsory escalation rules were set for every situation. They stipulated which discount amounts required authorization from a superior. Already in the first month, there was a clear drop in the number of discounts. For key accounts, customer-specific pricing was systematized. A tool on laptops told sales reps the ideal target price for every order– depending on customer type, product type, delivery time and further criteria. This price served as a guideline in negotiations. Furthermore, by restricting the amount of uncoordinated discounts, there was a significant increase in margins.
- Controlling And Remuneration More transparency and better steering: At the screw manufacturer, a new sales controlling system was set up that delivers a multi-dimensional revenue and profit margin analysis at the push of a button. The analysis quickly pinpoints and corrects inefficiencies on regional, product group and individual employee levels. What’s more, the margins of the screw manufacturer benefited from changes in sales remuneration. The bonus no longer depended solely on revenue, but also on how well the target price was achieved in negotiations.
There is no one optimal way of organizing your sales division, but there is the one right path to sales excellence. This path will take you through fives steps covering sales strategy, market approach, sales structure, margin management and controlling/remuneration. The end game, strong sales, needs direction and implementation before it can really take off and achieve maximum results.
This article was co-written with Annette Ehrhardt, Senior Director at Simon-Kucher.