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Sales Efficiency Research Project

Sales Efficiency Research Project. May 2, 2011 Jerry Hagerman. Agenda. Research Project Background Project Methodology, Current Status, & Next Steps Initial Findings – Interviews & Survey Distributor Sales Reps Time Sinks Facebook and Twitter? New Products – Best use of Channel Resources?

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Sales Efficiency Research Project

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  1. Sales Efficiency Research Project May 2, 2011 Jerry Hagerman

  2. Agenda • Research Project Background • Project Methodology, Current Status, & Next Steps • Initial Findings – Interviews & Survey • Distributor Sales Reps Time Sinks • Facebook and Twitter? • New Products – Best use of Channel Resources? • Who owns the “customer”?

  3. The Background

  4. Research Project Background • Initial presentation to CAP Council • 11-08-10 • Team of Bethany Sullivan and Jerry Hagerman

  5. Research Project Background • Estimated Industry “Spend” $4.4B • Improvement Impacts Top AND Bottom Line • Highest Return on Research $$$ • Leverages Previous Work of… • NAED’s Product Introductions Task Force • NAED’s POS/POT Task Force • NAED’s Certified Sales Professional • Deliverables: Most Impactful

  6. Questions To Answer • Channel Productivity • How can your company identify duplicative sales expenses throughout the channel? • Sales Efficiency • What sales productivity tools does your company employ to support the sales efforts? • How does your company measure sales reps selling time vs non-selling time?

  7. Questions To Answer • Sales Efficiency (continued) • How are fixed costs allocated across your customer base? • What elements of cost are included in your analysis? • New Products • What is your company’s process for introducing new products? • How does your company measure value-add product solutions sales successes?

  8. The Team NAED Staff Industry Personnel Jerry Young – Huntzinger Bros. Warren Janes – Maurice Electric Paul Shields – Hite Co. Jeff Szala – Western Extralite Mark Gibson – Agents Midwest • Ed Orlett • Erica TenEyck • Tara Mettler

  9. Project Methodology, Current Status, and Next Steps

  10. Project Methodology • Utilize 3 research methods • One-on-One interviews • Sales managers and sales reps • Observe through “ride-alongs” with sales reps • Design survey with key questions • Currently with CEP Sales Professionals • Will be adjusted and sent to all NAED sales professionals

  11. Current Statistics • “Ride-Alongs” – 12 • Distributor Interviews – 11 • Manufacturer Interviews – 7 • Survey Sent to 250 CEP Professionals • 5% current response rate

  12. Next Steps • Continue interview process • Targeted interviews: companies introducing or utilizing new sales efficiency tools • Continue “Ride-Alongs” • Looking for volunteers different from current distributor profiles • Survey submission to NAED Sales Professionals • Target date: May 16th

  13. Next Steps • Research sales practices of other industries • Research will be based on other supply chains • Looking at parallel distribution models • Develop “Best Practices” based on findings • Evaluate next steps and develop recommendations

  14. Selling Study Deliverables “What we need to do” • Research Paper/Recommended Best Practices • What works/what doesn’t • Required Changes • Industry measurement tool • Selling vs. non-selling time • Online Experts Exchange

  15. Selling Study Deliverables “What we need to do” • Industry measurement standards • Customer value vs. sales effort • Standardize allocation method for fixed costs • Recommendations for next steps: • May or may not be included in this study • Other areas for improvement • PowerPoint ®

  16. Initial Findings – Interviews and Survey

  17. Interviews Initial Findings • Some of our findings are very basic: • “Fish where the fish are!” • Use samples to show value of product solutions • Use internal sales meetings as collaborative training opportunities – product & tools • Customer needs may dictate sales time committed • Need identified for customer value vs time required • Face-to-face customer time is critically important

  18. Interviews Initial Findings • Some more in-depth findings: • Use web site as primary communications portal • Allows immediate access to: orders, open orders, credit, purchase habits, product & application solutions • Smart-phone is primary tool for distributor rep connectivity • Access phone, email, distributor web, & web resources • New tools are continually being evaluated • Notebooks (iPad), Facebook, Twitter, LinkedIn • Is sales rep productivity tools worth the investment? • Salesforce.com, etc.

  19. Survey Initial Findings • Territory Ranges – • Average Territory: $3.4M & 18.9% GM • Average 41 customers – actively call on 24.4 • Range of customers of 1 to 145 • Face Time – • Average 49.5 hr work week – 59.8% is face-to-face • Face Time ranges from 42 hours to 25 hours

  20. Survey Initial Findings • Non-Face Time – 19.2 hours/week • 27% entering orders • 16% resolving customer disputes • 30% Other • “Quoting, searching, substituting” • “Quotation preparation” • “Various sales management & logistics issues” • “Having to answer phones and wait on customers”

  21. Survey Initial Findings • Does your company have a web site? 100% • Can customers place orders? 75% • Of customers who use web site, 80% place orders • Does web provide accurate prices? 50% • Does web provide order & shipping info? 33% • Robust product search capability? 67% • Application solution recommendations? 41%

  22. Survey Initial Findings • Smart Phones – • “Quick response to customer needs” • “… usually handle issues before it’s too late.” • Interviews showed – • Smart phones enabled instant access to customer queries where companies provided strong web sites

  23. Distributor Sales Rep’s Time Sinks

  24. Group Question • What is the value of the outside sales rep? • NAED PAR report = average employee cost $65.6K • Payroll expense per employee of “Typical NAED Dist.” • Is the expense over $100K for “Typical …”?

  25. Group Question • Sales rep non-face time: • Order entry – 27% • Customer Dispute Resolution – 16% • Other – 30% • “Quoting, searching, substituting” • “Quotation preparation” • “Various sales management & logistics issues” • “Having to answer phones and wait on customers”

  26. Group Question • Order entry – 27% of non-face time – 5+ hrs/wk • What resolutions are possible? • What is the cost of a sales rep per hour? • What’s the gross margin impact per hour?

  27. Group Question • Dispute Resolution – 16% non-face time or 3+ hrs • What tools do we have to reduce dispute resolution? • What is the impact on rest of organization?

  28. Group Question • Other – 30% of non-face time or 5 ¾ hrs/wk • Quotations, SPA’s, Research, Substitutions • Covering phones and counter in the mornings • What is the value of a strong inside team?

  29. and

  30. Survey Initial Findings • Does your company use Facebook? • One positive response • Use of Facebook to promote: • Training • Product promotions • Counter Days • Do you promote the use of Facebook? “No”

  31. Survey Initial Findings • And the use of Twitter? • No positive responses • Complaint for both Facebook & Twitter – • Very high resource requirements to do it right

  32. Interview Results Differ • Manufacturers are starting to experiment • New product introductions • New application uses • Send only to self-qualifying recipients • Some have very high rate of viewing

  33. Group Question • How many here use • How do you use them? • Are they productive tools to reach the customer?

  34. New Product Introductions

  35. Interviews Initial Findings • New Product Introductions – • Manufacturer’s interviewed set objectives: • 50% of sales volume in new products • New products defined as new to market 5 yrs or less • Some manufacturers have specialized direct reps • Concentration on architects, specifiers, etc. • Concentration on “solution oriented” contractors • “Build-the-brand” awareness

  36. Interviews Initial Findings • Distributors sales reps interviewed – • Difficult to stay up on new product introductions • “Someone introduces a new product everyday.” • Customers are hard to convert from past practices • Successes are easiest with samples • Changing habits and processes is difficult • Openness to change requires “pain” and “need"

  37. Group Question • Manufacturer’s question – • Are specialists required to “build-the-brand” or fill a sales void of educating the architect, specifier, and/or solutions-oriented contractor? • Distributor’s question – • What’s the most efficient use of resources when introducing new products? Or do we wait until someone asks for it?

  38. Who owns the “customer”?

  39. Distributor Sales Rep Role Customer User Distributor Sales Rep

  40. Who Owns the Customer? Owner or Owner’s Representative Architects Specifiers, Engineers Owner’s Advocates General Contractor Electrical Contractor Distributor Flow of Goods Flow of Information/Sales Manufacturer

  41. Survey Initial Findings • Who should own the customer? • Distributor Sales Rep – 50% • Sales Rep for Contractor - 8% • Direct Rep - 0% • Independent Rep - 0% • All of the Above - 42%

  42. Survey Initial Findings

  43. Group Question • Why do you think so many factory direct and indirect sales reps are considered competitors? • 38% of Factory Direct Reps • 46% of Factory Indirect Reps

  44. Thank you for your interest and your participation

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