McKinsey Quarterly just published an interesting piece on the sales process “Freeing up the sales force for selling” (you need to subscribe to read the full article). The key learning is that most salespeople (especially in the field) don’t have optimized workflow processes and spend often more than 50% of their time NOT selling and speaking to customers. Optimizing these processes helped one of McKinseys clients’ sales people “gain an average of 15 percent more time for selling, conversions of proposals to sales rose by 5 percent, and the cycle time for internal sales processes shrank by 20 percent.”
No end to end sales process optimization
From my own experience, this was a very common problem in the sales organization I worked for from 2000 to 2007. For example the part of acquiring new contacts and inviting those potential customers to seminars was still managed by filling out excel sheets which were then typed into the CRM system. The invitations were sent through regular email or post without email metrics. Why was that the case?
Belief in sales excellence
As a sales driven organization the key belief was that we would be a superior sales organisation by investing more time in training (which at the time were held by other consultants for free), having an integrated approach to financial planning and developing products with unique features for our customers. This worked well in the eighties and nineties and resulted in becoming 5 times Best Company of the year by Manager Magazin and rising stock prices. So talk about better support systems were (often rightly) criticised for being an excuse for lack of sales power and being more expensive and complex than focusing on training selfmotivated sales people within a commission based structure.
IT focuses on corporate processes, Sales on selling in person
For its revenue the company got paid by the insurers and banks. As HQ was responsible for these processes being the broker “back office”, this meant for operations having to deal with multiple systems of insurers and banks, which added a lot of complexity (and resources) to the IT infrastructure. So the IT focus was on handling integration with the insurers’ IT on the backend. Work on end to end sales process optimization would add additional complexity and cost. And sales directors came from a field background with often little attention for process optimization or IT as corporate culture focused on individual achievements of agents. Marketing was of little importance as customer acquisition was the prime task of the sales agents.
Few incentives due to organisational structure
From a cost perspective, the company had a dual structure of HQ and independent sales agents working commission-based. Any cost additionally incurred was in first instance a cost for HQ, diminishing profits, not for the independent sales persons themselves. So there was not a large incentive for HQ to streamline processes if they could not directly bill sales agents for it. Any cost increase was normally heavily criticised by the sales agents.
On the other hand, for a sales person it was not possible to change the IT structure. Individual work-arounds focussing on using the internet more intelligently (by programming websites, where participants could confirm their participation for seminars or appointments), were officially discouraged and had the problem of not being able to integrate with the existing IT infrastructure. What several agents did, was to hire additional people to handle to more manual and time-consuming tasks of acquiring customers and doing paperwork, while focussing on the actual selling of products. This was allowed to a very limited extent, as it might result in a “investment race” of consultants outspending each other on marketing and back office capabilities.
Losing the competitive edge
As the market matured, the positioning of having an integrated financial planning approach became less distinct as banks and insurers started to advise their clients more holistically (often with the help of former consultants of our company). As products matured, the distinct features in the products also became less of a competitive advantage. What remained was the belief that the training of the sales force was superior. And even there, it was officially discouraged to obtain acknowledged, industry-specific qualifications like the Certified Financial Planner, as it might contradict the idea that the internal education was “Best in Class”.
Strength as a weakness
The idea that a good consultant would be able to sell any financial product became a crutch. And since there were many excellent sales people who would sell within those limits of unstreamlined corporate processes, the pain was not felt that clearly. And without this felt pain, the company focused less on providing long term value by customer focused end to end process optimization and adapting its business strategy to a maturing market.