2007 In Review

From the perspective of CMC, 2007 was a good year for us and for the vast majority of our clients. Profitability and cash flow were generally quite good (good asset management), but revenue growth was more mixed. We knew revenue growth would be mixed going into 2007 because of the instability in consumer confidence in 2006. (Remember the correlation between consumer confidence and capital goods expenditures.) That specific knowledge led us to focus much of our work in 2007 on Sales Management both in North America and in Europe.

The first task in improving Sales Management was to establish a clear expectation with regard to sales reps. As we have discovered in much of our work, Pareto's principle was applicable here. Using the data base of the 400+ dealers in our Best Practices Groups, roughly 10% of sales reps produce 40% of results (A Reps), 15% produce 30% (B Reps), 25% produce 20% (C Reps), and, more critically 50% of the reps (D Reps) only produce 10% of the results. There is great reluctance to deal with these chronic low performers even though they average more than 7 years experience.

One interesting note, of the A reps, the top players, often almost one-half had less than 5 years experience. Does this mean that if you have talent you develop, but if you don't you languish as a D rep? (We are waiting for one of our manufacturer clients to commission us to do a detailed profile of the A reps with less than 5 years experience. This is the basis of recruiting and selecting sales reps of the future.)

As we worked with sales managers in 2007, we identified three action items that directly drove higher performance of the sales reps. Those items are:

Field Time - Sales managers who are in the field 3 or more days per week (60% of their time) are significantly more effective in achieving high sales productivity. They are better "coaches". (Coaching - acting in a way that promotes the continual development of the skills of the people in your organization. Monitoring is not coaching.)

Specific goals - Results for sales reps are often not singular. We see sales reps with a "quota", which differs from their "goal", which differs from their "forecast", which differs from their "minimum", that differs from the overall sales plan. Pick one.

Account Management - The work plan for a sales rep should be very specific. Which accounts should they call on? (approx. 75) How many calls per each account? (Opportunity driven) What is the specific entry strategy or penetration strategy for each account? (And the organization support required).

These action items have driven sales growth in some cases to a 30% increase.

We expect that in 2008 we will continue to focus on this sales management process, with specific emphasis on "coaching".

Although, my instincts are that consolidation and rental may surface as equally important issues in 2008.