Capacity, Coverage, and Capability

capacity_coverage_capabilityWe’ve worked with several clients over the past 18 months on elements of their sales strategy, which clearly defines who you are selling to, what you are selling, how you are selling and why you are different – all based on the desired returns for the sales organization (revenues – cost of sales). In recent interviews for a book that Michael Perla and I are writing on sales force transformations, several executives told us that determining whom you should and should not sell to is the first step. That decision alone will inform everything else you do. It’s a key piece in defining your sales transformation roadmap as the strategy informs everything that follows: the structure of the sales team(s), and the capabilities, tools, people and processes that are required for success. There is no one-size-fits-all strategy.

One client that we’ve worked with, a technology hardware provider selling to large corporate customers, wanted to reexamine how it went to market – direct vs. channel – as well as whether to focus on large, global accounts. In its current state, this company focused more on territories, but many of those territories had little market opportunity and distracted them from what was actually driving the business: the top 5% of the account base. The structure needed to be more account-based, with the strategy to capture higher wallet share and sell more differentiated solutions that included intellectual property, services and hardware. Overall, once the client re-formulated its structure and strategy, it began to re-evaluate its people and whether it could effectively execute the new strategy, along with the tools and processes to enable it. The company’s roadmap included work streams covering up-skilling and hiring new talent, deploying new tools and technologies, and defining and adopting new business processes to support the future state strategy.

A key component of this structural change revolved around the 3 C’s of Sales Strategy:

  • Capacity – examining the workload required to sell and service customers based on relevant dimensions, such as size, location, vertical.
  • Coverage – determining the segmentation of customers and based on size, potential, capacity, location, etc., aligning levels of sales force coverage (direct and indirect).
  • Capability – identifying the level of sophistication required to have conversations with different levels of customers, which for many companies spans strategic/consultative to tactical.

By examining each of these areas, a sales organization can maximize both selling efficiencies (e.g., cost of sales impacts by reducing sometimes overlapping resources, reducing T&E, and expanding the “bag” of solutions) and effectiveness (e.g., creating more value for the customer through broader solutions, single point of content). Another client, a large CPG firm, is reshaping their business from what was essentially a portfolio of siloed companies, into a single, more integrated company that can better meet the needs of customers and deliver substantially better results for shareholders. This company had six separate sales and marketing teams calling on the same retail customers and sought to streamline these disparate teams into an integrated selling organization offering the “full bag” of solutions. Based on the 3C framework, we helped them with the following:

  • Capacity – determined the amount of time required to sell and service customers and the financial cutoff for covering a customer with a field-based sales person.
  • Coverage – ranked more than 7,000 customers based on current revenues and cross-sell potential and then created revised sales territories that reduced average overnight stays from 89 to 41 for a geographically focused field-based team.
  • Capability – facilitated sales leaders through a process to calibrate the existing sales talent and align to the revised territories and then equipped the sales team to sell the full portfolio of brands by working with Brand and Marketing on sales training that integrated with a new unified sales process.

As a result, the company realized $1.9m (11% of the COS) in savings from consolidating the sales team and saw a 22% increase in sales due to the number of customers buying multiple products/categories along with increases in customer satisfaction by having a single point of contact.

How well have you aligned the 3C’s for your sales organization?

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