A related post on his blog claims that “Money cant buy you performance”.

Some questions that he raised in my mind:

• When we try to implement scalable business processes, are we trying to “dumb-down” the work to a “mechanical” level?
• Do performance metrics measure only “mechanical” performance and do we run the risk that incentives based on such metrics could negatively impact creative performance?
• How can we ensure that we empower our employees with autonomy, mastery and purpose – that Dan proposes as the components of the new “business operating system” in a scalable model?

Especially in B2B sales, every sales manager we have interacted with has requested that our sales pipeline metrics be converted into an incentive scheme. We have been making plans to implement an incentive scheme, but based on the Theory of Constraints – which proposes to measure global performance metrics – that relate performance of individuals or roles to the overall throughput.

It would be interesting to see how Dan’s research ties into the theory of constraints methodology.

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According to a recent report by MarketingSherpa, the biggest challenge for sales people is to generate high-quality leads.

To try and understand why it is such a big challenge, we must first answer the question – what exactly are “high quality” leads?

Universal Lead Definition

Lead generation guru, Brian Carrol says that most companies lack a clear definition of a sales lead – that is, their sales and marketing departments do not agree on a universal lead definition. He responds to the above survey results on his blog and advises sales and marketing teams to work together to create a Universal Lead Definition (ULD). If leads generated by marketing are transferred to sales without qualification, sales persons will assign a very low priority to following them up. By having a common definition, marketing can presumably ensure that leads passed on to sales are qualified as “high quality”, so as to address their concern.

But can sales and marketing really agree on a common definition of a qualified lead? To answer this question, we need to understand how we measure the performance of both these functions, and see if having a common definition is consistent with their individual objectives.

The Marketing Perspective on Leads

Marketing perspective on leads

From a marketing perspective, the ROI of marketing initiatives – campaigns, events etc. – are measured by the number of leads generated. Hence, they tend to keep minimal qualification criteria so as to get the maximum number of leads possible for the given marketing budget. For example, in case of a direct mailer, every response is considered as a lead. Or in case of a promotional event or exhibition, every person who drops a visiting card is considered as a lead. And rightly so, for however small the chance of success and however long the sales cycle, a lead is still a prospective sale!

Marketing ROI ~ Number of leads generated / Marketing Spend

To maximize the ROI of marketing initiatives, marketing requires lax lead qualification criteria, if any.

The Sales Perspective on Leads

Sales perspective on leads

From a sales team’s perspective, sales performance is measured by their ability to meet targets for a pre-defined period, such as a quarter. Follow-up of every lead requires sufficient time – more so when the buying process is complex and involves several decision variables. Available sales time is limited primarily by the size of the sales team. If each lead is to be given the necessary time and attention, there is a limit to how many leads the sales team can follow up.

The primary sales performance indicators are:

Conversion Ratio ~ Orders Won / Leads or opportunities
Value Converted ~ Sales Order Value / Sales Targets

Sales persons usually prefer to maintain conversion ratio at a healthy level depending on the market average. A higher than normal conversion ratio could imply inadequate number of leads or opportunities in the pipeline, while a lower conversion ratio could indicate lack of adequate closing skill.

Hence the main determinant of performance is the ability to achieve assigned targets. For this, sales persons will choose to follow-up on those leads or opportunities that:

• have the best chance of closing within the current evaluation period (e.g. current quarter) and
• have a high enough estimated sale value to cover the deficit in their assigned target.

As such, opportunities that are already in the pipeline will serve these objectives better than leads that have dubious value and unknown sales cycle. Hence leads are usually given a lower priority, or postponed indefinitely, unless they have a proven quality.

To maximize sales performance, sales requires strict lead qualification criteria.

The Sales and Marketing Process Disconnect

The Marketing and Sales processes are usually disconnected from each other. Philip Kotler, Neil Rackham and Suj Krishnaswamy write in an HBR article:

Sales departments tend to believe that marketers are out of touch with what’s really going on in the marketplace. Marketing people, in turn, believe the sales force is myopic–too focused on individual customer experiences, insufficiently aware of the larger market, and blind to the future. In short, each group undervalues the other’s contributions. Both stumble (and organizational performance suffers) when they are out of sync. Yet, few firms seem to make serious overtures toward analyzing and enhancing the relationship between these two critical functions.

They conclude that:

The strains between Sales and Marketing fall into two main categories: economic (a single budget is typically divided between Sales and Marketing, and not always evenly) and cultural (the two functions attract very different types of people who achieve success by spending their time in very different ways)

Further, the marketing and sales processes are also disconnected. The marketing funnel works with the target market and attempts to generate leads. The sales funnel starts with opportunities and attempts to generate sales orders.

Marketing and Sales Process Disconnect

A forced connection between these two processes will require a resolution of the conflicting definitions of a lead that both departments will have.

In case we try and implement the marketing perspective of a lead and have lax lead qualification criteria, every lead captured by marketing will need to be followed up by the sales team.

Forced implementation of marketing perspective - lax lead qualification criteria

This will result in overloading the sales team, resulting in lowering the conversion ratio and the sales value converted. On the other hand, forcing the implementation of the sales perspective of strict lead qualification criteria will result in reduction in the marketing ROI, and very likely lead to lost business.

Forced implementation of sales perspective - strict lead qualification criteria

As we can see, there is a conflict on hand. It seems impossible to arrive at a universal lead definition as suggested by Brian Carrol, and even if we manage to agree on a common definition, implementing it will result in either departments individual objectives to be compromised.

We shall use the Evaporating Cloud methodology to try and break this conflict.

The Sales and Marketing Evaporating Cloud of Conflict

The Sales and Marketing Evaporating Cloud of Conflict

1. Both departments are working towards a common objective – of ensuring high sales volume
2. The marketing departments tries to achieve this objective by maximizing the number of leads generated from marketing initiatives.
3. The prerequisite for this is that the lead qualification criteria should be as lax as possible
4. The sales department tries to achieve high sales volume by maintaining their conversion ratio and maximizing the sales value generated
5. To prerequisite for this is that they have a strict lead qualification criteria that ensures that the sparse sales resources are utlized well

To evaporate this cloud of conflict, one must examine the underlying assumptions behind each argument that lead us to the conflict.

The following are the two assumptions that lead us to the conflict:

1. Leads have to be qualified either by sales or by marketing
2. Leads that are not qualified are dropped out of the funnel

Both these assumptions are invalid, for:

1. Lead qualification can be done by an independant, low cost resource – such as a tele-marketing team or by using an online self-qualification system.
2. Leads that do not qualify can be nurtured in a low cost CRM initiative that helps develop the lead into a qualified lead

An independant, low-cost lead qualification and nurturing process

Lead Qualification and Nurturing Process

By having an independant lead qualification team that uses a low-cost telephonic or online qualification process, leads generated by marketing initiatives can be divided into two groups:

• Leads that satisfy the universal lead definition
• Leads that do not satisfy the universal lead definition

Lead Qualification Process

The leads that qualify the ULD can be immediately transferred to the sales team to follow-up and close. The leads that do not qualify can be put into a nurturing program that maintains the dialog with the lead till it converts into an opportunity that is worth following up by the sales team.

The objectives of the nurturing process are to:

• Maintain a continuing dialog with the lead by using nurture marketing initiatives, till it satisfies the universal lead definition
• Capture and track all responses and behaviour of the lead
• Develop an intelligent buyer profile that can assist the sales process to close the resulting opportunity

Lead Nurturing Process

There can be various types of low-cost nurturing initiatives, including email campaigns, online and offline events and webinars, articles and white paperts on the web site, blogs, etc. Each of these initiatives will result in some responses. All such responses can be tracked and recorded in the lead nurturing process. Every response, be it a click on a link in an email campaign, downloading a white paper, comments on a blog, etc. add to a valuable buyer profile that is useful when the lead converts into an opportunity for the sales team to follow up.

Conclusion

It is possible to resolve the conflict between sales and marketing by introducing an independant lead qualification process that utilizes a universal lead definition criteria for evaluating every lead generated by marketing initiatives and categorizes them into qualified and un-qualified leads. This strategy not only breaks the conflict, it can enhance the individual performance metrics of both departments.

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Justin Roff-Marsh, proponent of his highly effective Sales Process Engineering methodology that incorporates the techniques from Theory of Constraints into the sales process – has written an excellent article on his Sales Process Engineering blog, where he explains “Why the term ‘communication problem’ insults your team members and retards the performance of your organization“.

Justin claims that humans are remarkably good communicators as compared to other creatures, and have proven their ability to communicate effectively in complex environments that have very small margins for errors, such as operating theatres or airport traffic control. Hence, justifying errors as communication problems prevents us from investigating and resolving the root cause.

Process design is the real problem

As he says,

In my experience, almost all the issues that are conveniently classified as communication problems are actually process design problems. And, in most cases, the problem is that a hand-off is necessitating the transfer of complex information from one person to another.

He gives the example of a sales process for a built-to-order product or service. Here, a sales person interacts with the customer initially to understand the requirements, and then hands-off the specifications to production. The errors resulting in such a situation is due to the need to transfer complex information between the sales person and production.

The proposed solution

In such cases, it’s important to recognize that complex information (almost by definition) cannot be transferred from one team member to another without information loss. Therefore, it is incumbent upon management to redesign the process so as to ensure that either:

1. These hand-offs are eliminated
2. The requirement to transfer complex information is eliminated

For the first approach, he suggests introducing a third person such as a project manager, who partners with the sales person and later provides the specifications to production, thereby providing continuity in the process and eliminating the hand-off.

For the second approach, he suggests that complex information should be converted in the form of easily quantifiable conditions which need to be satisfied. This implies that one can conver the complex information into a set of measurable parameters which can be evaluated to meet some prescribed conditions.

Milestones and Forms

In the On2Biz workflow model, the sales workflow is modelled as a sequence of milestones, where each milestone is a verifiable intermediate outcome in the process. The following diagram illustrates a sales workflow, with various individual projects at various stages of completion.

Sample Sales Workflow

Each milestone can be assigned to a different person in the team. The following workflow chart illustrates the role assignment and workflow rules:

Sales Workflow Chart

As illustrated above, On2Biz automatically generates alerts wherever there is a hand-off from one person to another. In addition, On2Biz has a provision to attach a customizable form to each milestone. The form can contain parameters that capture any complex information along with validation, ensuring that no important information gets lost during hand-offs.

The following screenshot shows milestones from an actual workflow implemented in On2Biz:

Milestones with customized forms to capture information

As seen above, each milestone has additional information captured in the format specific to that milestone. For example, the first three milestones are completed by Jacob and Sanjay, who are the tele-sales and field sales executives respectively. If converted, they hand-off the project to Misha, the accounts person. At the converted milestone, they fill in the form containing the required information for accounts to carry forward the project seamlessly. Further, Misha hands-off the project to Kavita, the creative team member, but ensures that all payment details are filled in the cheque banked milestone.

This illustrates how, by creating a properly documented workflow, the errors that can creep up due to hand-off of complex information can be avoided as per Justin’s recommendation.

For more information on the On2Biz Workflow Model, visit http://on2.biz

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A sales person is already juggling with multiple opportunities in the pipeline that are fighting for attention and that take long to close. What the sales person needs is a way to simplify the information and make it actionable. And he needs to be able to get this without feeding in a whole lot of data in the system.

Dave suggests the following:

What these salespeople require is a sales-centric application that helps them with the issues critical to their personal and departmental success such as:

1. What’s the next specific step I need to be taking with each prospect in my pipeline and when should I take it based on the natural, not forced, progression of my prospect’s buy cycle?
2. What information do I need to gather next from my prospects that will provide and build on the contextual knowledge I must have in order to best help them visualize how my products or services will help them achieve an objective, satisfy a need or solve a problem.
3. What information do I need to convey next to my prospects that will provide and build on the contextual knowledge they need to properly and fully understand how my products or services will help them achieve an objective, satisfy a need or solve a problem.
4. Which of my prospects should I prioritize my time and attention to based on how they’ve demonstrated their levels of interest?
5. What members of my extended sales team do I need to involve now in my sales opportunities and what will they need to accomplish?
6. How can I delegate administrative but necessary tasks to optimize my sales time with prospects?

What is required is a customizable template that the sales person can use to track the progress of each opportunity with minimal data entry. The template needs to act as a sales guide and a reference for the sales person to use when evaluating and prioritizing opportunities.

The template can easily capture the progress of the opportunity through various sales stages or milestones, and automatically measure the time taken to move through the pipeline. This gives the sales person a measure of the pipeline velocity – or the speed at which the opportunity is moving through the pipeline. This is a very important metric that can help the sales person prioritize opportunities.

Recognizing that the sales person is the primary constraint in scaling up sales, any system can serve to improve sales performance only when it improves the throughput of the sales person.

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Laura writes about her recently published report that recommends a four-point strategy to B2B marketers to avoid becoming obsolete. She advises against merely increasing marketing spend by creating new campaigns or clever advertising will not deliver results. And suggests that blindly getting into online or social marketing will only de-focus the marketing strategy.

To avoid obsolescence, B2B marketers should undertake four transformative steps:

1) Build a marketing-only database to capture buyer insight.
Today, stalking prospects with outbound, undifferentiated messages yields unpredictable results. But this is what happens when marketers rely primarily on list providers, database marketing services, or other sources of information for targeting buyers. To make campaigns pay off, marketers need to collect and analyze more information about what separates their best customers from the others. Build a marketing database to do this. Big firms may need to look at something from Aprimo or Unica, smaller firms can get by with less. But get a handle on your prospect data in 2009.

2) Shift from simply generating demand to managing it.
When marketing delivers a new batch of leads, sales wants to know exactly which ones have the most potential, regardless of whether marketing outsources the leads or not. To convince sales that marketing-qualified leads are worth pursuing, marketing must execute multifaceted campaigns that engage — and qualify —prospects while extending marketing’s responsibility further along the sales pipeline. Top marketers focus on managing demand, not generating it. They also score their leads numerically, systematically.  I’ve talked about this before, but you can see how you rate here.

3) Combine digital and traditional tactics to build dialogue around needs and motivations.
Business buying cycles are long, and marketers use this to their advantage when they weave together digital and physical channels to engage buyers emotionally, deliver brand experiences, and form ongoing relationships. Integrated marketing success in B2B depends on leveraging the strengths of different channels to build an ongoing conversation with buyers. To do this well requires organizational alignment, an outcome-based strategy, deep customer insight, analytic planning, and consistent measurement. Find out how you stack up here.

4) Embrace the groundswell and community marketing principles.
As Social Computing moves into the business world, B2B marketers dial down on acquisition and step up to community marketing. To set community marketing strategy successfully, marketers must know whether target customers willingly participate in social activity on the job.  We have data to share with you about how buyers behave socially while working. Come preview it at our teleconference.They also need to set social objectives that align with business outcomes, and evaluate tactical and technology choices last.

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• High cost of sales, low margins
• Lack of clear product/offer differentiation
• Complexity in mapping customer requirements to product/offer
• Long sales cycle with unpredictable outcomes
• No consistent sales performance, difficult to forecast
• High level of stress in sales team, high turnover
• You can make/provide as much as you can sell

In short, if scaling up sales is the major bottleneck to scaling up your business, then here are some ideas to help you understand and tackle these challenges better.

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Some of our clients have sales teams and project teams that are located in different cities and towns acrosss the country. We have observed their process for routing expense claims to be slow, resource-intensive and cumbersome. The employees are typically expected to fill in vouchers and attach supporting documentation such as bills and submit them for approval. These claims are then approved by a local authority and then passed on to the central accounts department.

From our observations, having supporting documentation is a necessary evil. However, most of the paperwork is required primarily during initial approval by the local authority, and subsequent consolidation by centralized accounts can be much simpler if all the expense claims are digitally recorded in a central repository that is accessible to all locations.

The Expense Claims Workflow that we built provides the following procedure for expense claims:

The workflow proceeds as follows:

1. The employee situated at any location logs in to the application, enters expense claims using a simple form, that could be integrated with any other workflow such as the Sales Activity Management workflow, or Order Processing workflow.
2. At the end of the week, the employee takes a print-out of the report showing the expenses incurred during the week. He hands over this report, along with supporting documents such as bills cash memos, etc. to the local area manager. The area manager logs into the same application and views the claims and verifies them against the supporting documents, where relevant. The area manager may mark expenses as:

   Approved: The area manager may approve all or part of the amounts claimed. Those expenses approved by the area manager are forwarded to Accounts on a weekly basis. (The collective printouts of the expense reports along with the documents are forwarded by courier each week).

   Clarification: Expenses marked for clarification are sent back to the employee for clarifications. The employee gets an email alert with a link to the expense in question.

   Denied: Expenses marked as ‘Denied’ by the area manager may be reviewed later with the employee as required and can then be re-submitted subsequently.

3. The Accounts department at the head office receives all claims approved and forwarded by area managers from all locations. Accounts then looks up these claims in the same application. Accounts can then mark each claim as:
   Approved and Locked: Expenses approved by accounts are considered Passed and Locked. Approval may be granted for the entire amount or part of the amount only. The area manager then cannot modify the approval status.

   Clarification: Some expense claims may be returned to the concerned area manager or employee for additional clarification.

   Denied and Locked: Expenses denied by Accounts are considered final and locked. The area manager then cannot modify the approval status.

In the above workflow, all concerned persons, such as the employee who entered the claim, the area manager, or other persons with supervisory roles and permissions, may track the progress of each claim through the entire workflow. A stipulated time frame can be set within which claims are to be processed through the system, failing which alerts are generated and the defaulting claims are escalated to top management.

Finally, the expense information is tagged against other information in the workflow system, such as:

• Employee who incurred the expense
• Location / Division where the employee was located when the expense was incurred
• Expense Account Head
• Customer or prospect that was served
• Sales opportunity, project, or order against which the expense was incurred
• Travel, customer visit or other event that resulted in the expense claim

Due to the fact that each claim has all this information tagged to it, a detailed analysis can be provided that tracks the levels of expenditure by various above fields.

We shall soon post sample screen shots, analytical reports and graphs that the system generates.

We would like feedback and suggestions regarding any additional features that we could incorporate that may make the system more useful in different usage scenarios.

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Small businesses owners like Manoj are seeking solutions that will help them grow and join the surge in the Indian economy. And most of them assume that the solution to their scaling up needs is the one-size-fits-all ERP solution. After all, do we not keep reading about how every large manufacturing company in India has spent millions on large scale ERP implementations? If it seems to work for them, maybe it should work for us too.

As technology providers, we know that “One size does not fit all”, as Andy Hayler likes to point out. But as a small business owner, what issues does one have to consider?

Here is the discussion we had with Manoj:

1. Firstly, let’s begin by looking at what your existing pain points are. What fires do we need to douse? Where are we the most inefficient? What issues are waiting to become emergencies?
2. What do we want to achieve in the next 3 months, next 6 months, etc.? How fast do we want to grow in size? How many people? How many locations are these people spread across? What is the level of computer-friendliness do the people have at different levels?
3. Next, we look at the information base. As we grow in size, the main point of failure is lack of information availability. When we are a small team, its easy to keep in touch with every detail. As we grow in size, we lose touch with small details. The first issue to tackle is to plug the leaks of information flow from the bottom to the top. Now that’s not as easy as it sounds. Problem is, the information needs to be captured where and when it is being generated, in a format that can be re-used and analyzed. That means, you need:
   a. The infrastructure and systems to capture information at every point in the extended enterprise
   b. People who actually bother to enter the information
   Out of the above two, the latter issue is far far more difficult to achieve, especially with the kind of business processes Indian companies follow – ie, no processes – which is great when you’re small, but its un-scalable.

   So, we need to find a path of least resistance in creating the system to capture the information. This means finding a good balance between information value and ease of use. Creating a monster of a system makes it extremely difficult to implement. Its far healthier to do it stage-wise, in a way that we can change the plan as we go ahead, based on where we find least resistance and maximum value.

4. Where do we start? Obviously, information that is directly related to business transactions is of paramount importance, without which the business would not run. So I assume that the basic accounting system must be in place. But accounting is an extremely inward perspective of the business. The main drivers of a service-oriented business is customer responsiveness. How fast, and how efficiently are we able to respond to a customer’s need and find and deliver a solution that fits . Unless you have some other pain points that need immediate attention, the area to look into is the process of capturing customer information and the process of servicing and retaining customers by keeping information about them up-to-date and accessible at any time.

So what do you think about this approach? We would like to hear…

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A solution-driven enterprise provides custom-built solutions to customers based on their requirements. Processes in a solution-driven company can be represented as follows:

(see Sales Bottleneck in solution-driven enterprises)

Solution selling involves a time-consuming and resource-intensive needs analysis and solution design process.

Collaborative Sales

The needs analysis and solution design is a collaborative process. The skills required for needs analysis and solution design may not be available in the sales person alone. The sales process is more like a project, with a team of other experts – such as design experts for understanding the specific application requirements and designing/configuring a solution, financial experts for estimating cost, sales managers to arrive at a appropriate sales strategy etc.

For example, take the case of a company that manufactures and sells modular furniture. The sales person interacts with prospects and when the lead becomes hot, gets a team in place involving an architectural consultant who analyses the structural aspects of the customer’s site, a design expert who works out a design that satisfies the aesthetic and ergonomic requirements, a fabric expert to suggest fabrics utilized etc.

The sale cannot be closed until the customer is satisfied with each aspect of the solution suggested – the architecture, design, fabric and ofcourse, price. Hence, the sale cannot be completely attributed to the sales person alone. The entire team is responsible for the sale closure.

In a product provider, all these skills are utilized during the product design stage which is done before the selling process begins. The sales person merely sells the product. Customer requirements are assumed to be standard, and the solution is in the form of a standard product. No major needs analysis is required, and there is seldom any design process involved during sales. Sales strategies are not tuned for every customer.

Also, in a solution provider, the responsibility of the sales person does not end with closing the sale. The sales person is involved in the entire order cycle, becoming the single-point contact between the customer and the company. In a product driven company, the sales person is seldom involved in order fulfilment.

Thus, the measurement of sales effectiveness of a solution sales person is far more complex than a product sales person.

Role based targets

In a product provider, the sales targets and incentives can be assigned and measured largely on the volume or value of product sales. This simple model does not work in a solution provider, because the sale cannot be completely attributed to the sales person alone. Being a collaborative process, each person who is part of the sales project has a role to play. Sales targets can be assigned to each member based on the role.

For example, the diagram here shows two sales projects. The one on the left involves a design consultant and a sales person, while the one on the right is handled directly by the design consultant. Skills and resources may be pulled in as and when required for the particular sale.

In this example, the design consultant plays two different roles for the two sale projects shown.

Sales targets can be assigned to each sales project team member based on the roles played. In this example, the design consultant is expected to participate (as a design consultant) in sales projects amounting to a specified value or volume over a period of say a year. Similarly, the sales person has to participate (as a sales enabler) in sales projects amounting to a specified value or volume. The design consultant also has another target, of sales carried out directly by him by playing the role of a sales person.

This flexible model of assigning targets allows a solution-driven enterprise to completely and efficiently utilize available skillsets, by assigning sales responsibilities dynamically, based on actual requirements of the customer.

Assigning role-based sales targets

In the Reach1to1 Sales Activity Management System (SAMS), a role-based sales targets assignment system is provided.

The following table illustrates the process of assigning responsibilities (targets) to members of the sales team based on available skills.

Tracking Sales Performance

Sales performance is tracked by measuring the actual projected revenue from projects in the sales pipeline, and the actual orders received against the target value or volume.

The following table illustrates the sales performance of a hypothetical sales team:

Sample Sales Project using SAMS

The way it works in SAMS is illustrated in the following example:

1. Anand Nair, the Sales Manager, sets the following targets for Vinodkumar and Priyesh who report to him. Priyesh is an expert on applications of Active Equipment, while Vinodkumar is a sales person. Priyesh is responsible for helping all sales persons like Vinodkumar to configure active equipment into the solutions they propose to their customers. Priyesh is also expected to directly approach customers and close sales for active equipment.
   

   Sales Team Member	Role	Product Category	Sales Target
   Priyesh	Sales Person	Active Equipment	1000
   Priyesh	Design Consultant	Active Equipment	2000
   Vinodkumar	Sales Person	Active Equipment	500
   Vinodkumar	Sales Person	Enclosures	500

2. Vinodkumar comes across a prospective customer, and starts a new project in SAMS. He requires help in designing a solution using active equipment, for which he pulls in Priyesh in the project team by assigning him the role of design consultant for active equipment.
3. Vinod and Priyesh visit the customer together, and create a solution that includes both, enclosure products and active equipment as follows:
   

   Description	Rate	Quantity	Amount
   Active Equipment	25	2	50
   Enclosure	50	2	100
   Total			150

4. As soon as the expected revenue figures are entered in SAMS, the sales performance report is updated as follows:
   

   Sales Team Member	Role	Product Category	Sales Target	Projects in Pipeline	Orders Closed
   Priyesh	Sales Person	Active Equipment	1000	0	0
   Priyesh	Design Consultant	Active Equipment	2000	50	0
   Vinodkumar	Sales Person	Active Equipment	500	50	0
   Vinodkumar	Sales Person	Enclosures	500	100	0

5. After several further discussions with the customer, a final solution is proposed, based on which the customer places an order for the solution as follows:
   

   Description	Rate	Quantity	Amount
   Active Equipment	25	3	75
   Enclosure	55	2	110
   Total			185

6. As soon as the order is booked in SAMS by filling in the Order Intimation Form, the sales performance report is updated as follows:
   

   Sales Team Member	Role	Product Category	Sales Target	Projects in Pipeline	Orders Closed
   Priyesh	Sales Person	Active Equipment	1000	0	0
   Priyesh	Design Consultant	Active Equipment	2000	0	75
   Vinodkumar	Sales Person	Active Equipment	500	0	75
   Vinodkumar	Sales Person	Enclosures	500	0	110

Summary and Conclusion

Solution sales is a collaborative process that involves skills that are available with different people in the company. By using a flexible, dynamic role-based target assignment and tracking process, the Sales Activity Management System (SAMS) can enable solution-driven enterprises to optimally utilize available skills and manage the solution sales process effectively.

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Business Processs

The processes of a solution-driven enterprise can be represented in the following simple model:

When the company is small, the promoter(s) carry out the needs analysis and solution design, while other employees take care of execution, delivery and support. With increasing number of success stories with early customers, the company grows by increasing resources required for execution, delivery and support. If the product involves manufacturing, then manufacturing capacity is increased. If it is a service, then more manpower is hired. However, the functions of needs analysis and solution design are not easy to scale up.

Conventionally, the function of needs analysis has been a part of sales. The terminology is borrowed from a product-driven enterprise model, in which marketing, sales, exectution and support can be almost independant functions. In solution-driven enterprises, the sales person does far more than converting leads into orders. The sales person is a partner, helping the customer figure out the needs, and design a solution to meet those needs.

In a small company, the sales is typically restricted to either the promoter(s) or some sales heroes. These solution-sellers are able to pick up the skills required for needs analysis and solution design. As long as the heroes are able to handle the demand in the market, the company continues to grow successfully. If all goes well, the demand grows too large to handle. Increasing the sales force with fresh talent is of limited value. The skills for needs analysis and solution design are not easy to learn. New sales persons add overheads without significantly increasing volumes and reduce profitability. This creates the sales bottleneck in a solution-driven enterprise.

The Sales Bottleneck

To tackle the sales bottleneck problem, the enterprise usually goes through its first big strategic transformation. The analysis goes something like this:

• The bottleneck to growth is the needs analysis and solution design
• How can we eliminate this bottleneck?
• Why not eliminate the needs analysis and solution design altogether?
• Answer: Productize the solution!
  

The easiest way to remove the bottleneck is to eliminate the constrained processes. Productizing the solution involves standardizing the product or service, thereby eliminating the functions of needs analysis and solution design. Commonly occurring requirements are served by standard solutions, with a bit of customization. Only high-value customers are given the luxury or personal attention, by the scarce solution designers in the company. There is obviously some amount of compromise in the match of the actual needs of the normal customer and the standard solution. However, if the demand in the market is higher than the supply, companies grow successfully by standardizing the product. The enterprise slowly transform from a solution-driven enterprise to a product-driven enterprise.

If the company gets totally involved in this phase of growth and does not give enough attention to the growing gap between the problem and the solution, this gap leads to a new pain point that some new entreprenuer recognizes and uses to start a new cycle. This phenomenon of the downfall of large companies due to a lack of disrtuptive innovation is explored beautifully by Clayton Christensen in his best-seller The Innovator’s Dilemma:

Finding new applications and markets for these new products seems to be a capability that each of these firms exhibited once, upon entry, and then apparently lost. It was as if the leading firms were held captive by their customers, enabling attacking entrant firms to topple the incumbent industry leaders each time a disruptive technology emerged.

So how does a solution-driven enterprise scale up while retaining the solution-driven approach? How does one remove the bottleneck in sales?

Sales Activities

Let us look at the solution-designer’s problem. If we measure the actual amount of time spent by a solution-designer-sales-person in utilizing the scarce skills of needs analysis and solution design, it usually adds up to a small fraction of the total available time. We did a brief survey of solution-driven companies, and asked sales persons to list out the activities they did. Here is a sample of those activities:

1. Customer contact activities
   • Lead generation & capture
   • Handle Customer enquiries
   • Prospects for new Customers
   • Customer Visits
   • Phone Calls
   • Correspondence
   • Customer entertainment
   • Outstation travel
   • Arrange customer visits to reference sites or execution units
   • Conduct demonstrations
   • Negotiations
   • Preparation of proposals and quotations
   • Cost benefit analysis
   • Comparison with competitors
2. Solution design activities
   • Requirements capture
   • Preparation of case studies
   • Configuration/design of solution
   • Preparation of Layouts/ Drawings/ Sketches
   • Cost estimation
3. Co-ordination and follow-up activities
   • Purchase Order follow-ups with customers
   • Order Booking
   • Co-ordination with distributors & agents
   • Co-ordination with execution/manufacturing unit
   • Order/Project Tracking
   • Quality Checking
   • Oversee Installation
   • Installation Bugs / Damage / Short Supply Handling
   • Payment follow-ups and reporting
   • Complaint Handling
4. Administrative activities
   • Weekly sales activity plan
   • Attendance reporting
   • Collection reporting
   • Order documentation
   • Expenses reporting
   • Daily/ weekly/ monthly reporting
   • Sales forecast
   • Post sales analysis (Profit & Loss)
5. Self-education activities
   • Keeping track of market know-how
   • Attending seminars, presentations and meetings
   • Attending exhibitions & road-shows
   • Monitoring competitor activity

As this list shows, there are several activities carried out by sales persons in a solution-driven enterprise that are not related to the scarce skill of needs analysis and solution design. However, all these activities are highly inter-dependant, and are therefore typically carried out by the same sales person.

Sales Activity Management

One outcome of the observation of solution-sales sales activities is to divide the activities into separate roles, with customer contact activities being handled by field sales persons, and solution-design activities being carried out by a sales support team that can interact with the field sales force as and when required.

That is where technology plays a part. A Sales Activity Management System (SAMS) can provide a platform for structured interaction between various sales functions carried out by different persons at multiple locations.

A Sales Activity Management System also has other benefits such as:

• reduce the overhead of administrative activities by reducing manual data entry,
• provide a common communication platform, where sales persons, sales support, order execution and support personnel can interact seamlessly
• provide a single view of all customer interactions to all concerned persons within and outside the company
• co-ordinate tasks between various persons working on a customer project
• provide automatic reports and analysis of sales activities so as to highlight inefficiencies in the system as pointers to process improvement

Smart Customization

The first part of the solution is to manage sales activities by dividing the activities into separate roles, and co-ordinating the activities by using a Sales Activitiy Management System. This will surely open the sales bottleneck significantly. The next level of systematization is to provide a way to automate the solution-design process itself.

There are several strategies than may work in different situations:

1. Rule-Based Solution Design
   In many cases, it is possible to create a rule-based solution-design system. Such a system represents the solution-design logic into a set of rules that are applied to a series of questions that are asked at each stage of the solution-design process, which breaks down the needs or requirements into a set of parameters. These parameters are then used to suggest parameteric solutions.

2. Experience Database
   In other cases where the solution-design process cannot be broken into a parameteric rule set, it may be possible to create an experience database. The process of solution-design is done manually, but the requirements and the solution is stored in the experience database. If the same or similar requirements are encountered again, the sales support person can look up the experience database to see the solution provided before, and merely tweak the solution as required.

3. Modular Solution Configuration
   In some cases, the solution can be broken into a set of modular components. In such cases, a solution configuration system can be designed that helps the solution designer to quickly pick up modules from the component database and create a solution to match the requirements.

Conclusion

Using systems such as the Sales Activity Management System and various strategies for smart customization, a solution-driven enterprise can grow without losing its agility, and retain its innovative edge as the market gets crowded with competitive solutions and products.

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