Put More Feet on the Street

Relentless pressure to simultaneously improve efficiency and boost revenue growth has led many B2B executives to focus on new ways to extract value from their existing sales operations. The way to do this is to concentrate on productivity improvements grounded in process, policy, or guideline changes. These improvements have quick turnarounds and require minimal incremental technology investments. They enable the extraction of value from foundational SFA capabilities, and help create direct accountabilities, with initiative owners ensuring the investment required is more than justified by the value created.

A good place to start is with transparency. Overlapping business groups, regions, and countries frequently make getting clear visibility into sales performance extremely difficult. Two areas, forecast management and pricing policies and operations, are the best places to begin rebuilding visibility into sales force performance.

Forecast management In most B2B companies sales reps and managers spend a lot of time generating and reviewing forecasts for periodic reviews of the sales pipeline, only to find that their forecasts are fraught with errors and inconsistencies, and provide few true insights.

Many times this happens for two reasons: First, sales reps often track leads and opportunities independent of a centralized database. As a result, management receives inaccurate forecasts and cannot pinpoint emerging opportunities, which in turn prevents the optimal allocation of sales resources. Second, sales management does not consider different sales cycles associated with different products when reviewing sales funnels summarizing the status of sales opportunities, from awareness creation and first contact to opportunity identification, proposal presentation, and contract completion.

Companies must leverage existing opportunity management tools and develop a set of consistent reports to generate forecasts automatically for specific deal types. Incentives (and penalties) that instill accountability should be put in place for process and tool adoption and for compliance. Management should also scrutinize forecasts more intensively by using standard templates and reports to regularly review sales funnel status at different P&L levels (i.e., territory, region, product, or industry).

Pricing policies and operations As companies grow in size and revenue, so do the number of sales transactions. The complexity involved in executing sales for deals with multiple products, business groups, and countries leads to another time-consuming productivity drain of generating quotes. Before a quote can be presented to a customer, reps must coordinate with numerous internal organizations (e.g., legal, finance, procurement) and seek approvals from various sales management levels in the business unit that have final authority over pricing for products. This often leads to wasted selling time, inaccurate sales quotes, poor customer experience, lost sales, and enough frustration that sales reps sometimes even pass sure wins and valuable deals to partners or neglect them altogether.

Many B2B companies are establishing a centralized deal-pricing function (i.e., a pricing desk or hub) or, if they already have one, are taking steps to improve its performance. Hubs have two main objectives: minimizing point-to-point interaction between the sales reps and business functions, units, and management layers and reducing internal iterations to get the right price quote to the customer.

The pricing desk serves as a central hub and has clear service-level agreements that dictate acceptable turnaround times for pricing quotes. But be sure it does not become a bottleneck or inhibitor of sales productivity. Ensure that the desk is adequately staffed with the right skills, can make pricing decisions, and has clearly defined escalation paths for quick resolutions to difficult trade-offs. By defining and communicating who has authority in various pricing decisions, B2B companies are able to effectively streamline the pricing process, ultimately freeing up reps' selling time, improving morale, and increasing deal-win rates.

Anupam Agarwal is a consultant at McKinsey & Co. He can be reached at anupam_agarwal@mckinsey.com. Jeff Schumacher is an associate partner at McKinsey & Co. He can be reached at jeff_schumacher@mckinsey.com