Improving Sales Effectiveness

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Measurements

ROI of the field salesforce

Companies are continually asking themselves if they are spending their money effectively and what Return on Investment (ROI) each area of expenditure is achieving – and sales & marketing investments must be included in this scrutiny.

Given finite resources, the decision to invest some of the sales & marketing budget in a field sales operation must be compared to a series of other options which should also deliver a measurable benefit to the organisation.

Organisations must be able to compare the ROI of these different options in order to optimise these investments relative to one another – one key question which is often asked is 'How many sales people should we deploy?'

Behind the answer to this question must lie an understanding of the point of diminishing marginal return which can be derived from the sales force – in other words the point at which an additional sales person will not add incremental profit greater than the cost of that person.

Equally organisations may wonder what is the minimum field sales investment which can be made before sales revenue begins to suffer (even to the extent of having no salesforce at all!), and how any savings gained may be re-allocated to other areas of customer investment or brand building to counterbalance any negative effects.

It is vital that the sales team is directed towards the channels, customers & outlets which offer the greatest incremental potential, & that their impact can be measured by comparing sales levels before & after their interventions.

Meridian helps its clients answer these issues and other related Sales Investment ROI questions, by helping them understand Sales Processes, Best Practice, setting and measuring KPIs and combining both hard and soft data to give Management insight into effective deployment of scarce resource. Very often the necessary data is already available in the organization – sales activity data from in-house or third-party sales operations and Epos data from retailer systems such as Asda Retail Link, Tesco TIE, Sainsbury's SID and Waitrose Connect – yet this information is not being fully exploited.

To find out how you can benchmark your in-house or 3rd party field operations against CPG best practice click here

ROI on customer promotional activity (BTL activity)

This issue is especially acute in the retail environment where most consumer goods companies are spending large and ever increasing sums of money below the line. As TV media fragments, so the impact from campaigns is diluted.

This phenomenon and the continuing consolidation of the retail sector help to explain why the proportion of the marketing budget directed at trade investment (BTL or Below The Line spending to support brands in the retail outlets) has been growing rapidly in recent years.

Consumer promotions account for a major part of this increased spend - from BOGOFs to price reductions, multi buys to link saves there is a significant (and mutual) investment being made both by suppliers and retailers.

Maximising the ROI on these promotions is therefore an even higher priority objective today than it has ever been.

Meridian works with its clients to gather data from a number of sources – including retailer extranet data such as Asda Retail Link, Tesco TIE, Sainsbury's SID and Waitrose Connect - reducing the 'background noise' in the market to give clear insight into both the ROI on a current promotion and more importantly, help the organisation decide which promotions should be run in the first place.

These twin imperatives of optimising promotional planning and modeling, and accurate promotional evaluation are critical organisational competencies, which rely on insightful (and ongoing) analysis which respects and reflects the complexity of the current environment.

To find out how you can benchmark your approach to maximising ROI on Trade Investments at outlet level against CPG best practice click here

ROI on POP (permanent & temporary)

With the fragmentation of media, ATL (Above The Line) advertising is reducing in its effectiveness to reach the consumer. In many cases it is also reducing as a proportion of total A&P spend. BTL (Below The Line) investment generally is increasing as a result of this and also due to retailer pressure.

A major investment in the area of BTL for Consumer Packaged Goods (CPG) companies is Point of Purchase (POP) or Point of Sales (POS) material as a way of communicating brands, occasions or offers to consumers.

These suppliers are increasingly interested in the impact POP placement has on sales and how effective one specific POP initiative might be compared to other alternative investments.

It is also vital to highlight the target outlets in a retailer's portfolio for specific varieties of POP material – for example, at a certain point in the 'league table' of outlets a specific item of POP material will fail to provide an acceptable return, and an alternative means of supporting the brand will need to be found.

Meridian helps its clients understand the ROI on these POP investments by gathering together data from varying sources - including retailer extranet data such as Asda Retail Link, Tesco TIE, Sainsbury's SID and Waitrose Connect - cutting out the 'background noise' in the market and developing tools to allow either ad hoc or ongoing measurement and insight development.

To find out how you can benchmark your approach to maximising ROI on Trade Investments at outlet level against CPG best practice click here

Tracking compliance to Trading Terms agreements

As Consumer Packaged Goods (CPG) increase their BTL (Below The Line) investments in absolute terms with retailers it is becoming more important than ever to ensure that Sales Driving investments are implemented in store in line with central agreements made at Head Office level.

Trading agreements reflect and incentivise excellence of implementation. Manufacturers are therefore turning their attention to measuring compliance to agreements made.

Once a robust measurement system is in place manufacturers can start to manage their agreements, helping to highlight issues to the retailer at store and SKU (Stock Keeping Unit) level, giving them the opportunity to maximise revenue and profit objectives.

Should retailers be unwilling (or unable) to comply with agreements made, as the measurement is in place, manufacturers have the potential to 'claw back' payments that would otherwise be made as a matter of course in the normal trading environment.

Meridian works closely with its strategic partner IRI firstly to measure & value the compliance gap, then to provide regular, cost effective & accurate tracking of retailer compliance levels at the aggregate & individual outlet level

To find out how you can benchmark your approach to maximising ROI on Trade Investments at outlet level against CPG best practice click here

Measuring the ROI of Trade Promotions

As Consumer Packaged Goods (CPG) increase their BTL (Below The Line) investments in absolute terms with retailers it is becoming more important than ever to ensure that Sales Driving investments are implemented in store in line with central agreements made at Head Office level.

This is particularly true of Promotional investments where the stakes are so much higher – the costs both in terms of gate fees and also in funding the consumer offer are significant, but the revenue increases can also be correspondingly high.

It is vital therefore that retailers implement exactly that which was agreed with the brand owner, but operational difficulties mean that retailers rarely achieve perfect execution. It is for this reason suppliers are therefore turning their attention to measuring compliance to agreements made.

It is not enough to know after the event that the promotion ran in 85% of stores – suppliers need to know the compliance level on day 1, then end of week 1, week 2 and so on.

The true value of the promotion will never be known if the supplier merely calculates the uplift at the aggregate or national level, because the non compliant stores will bring the average uplift figure down.

Suppliers need to consider two vital sources of data – EPoS at store level (such as Asda Retail Link, Tesco TIE, Sainsbury's SID and Waitrose Connect) to analyse the differing levels of compliance & uplift in different store types, and observational sampling on day 1 of a promotion to 'fire fight' the most pressing execution issues suffered by the retailer.

Diligent measurement will enable suppliers to link compliance to trading terms, either saving gate fee expense if targets are not met, or gaining additional sales revenue if compliance levels improve.

To find out how you can benchmark your approach to maximising ROI on Trade Investments at outlet level against CPG best practice click here

Developing sales activity tracking systems

Many organisations have a strong planning cycle with some robust processes. Many are very strong at breaking revenue down into specific product or service targets by customers. However, an area of almost universal weakness is in the area of activity planning and tracking.

Meridian believes that activity tracking is a crucial business protocol. If the link between activity and business results is understood, then tracking actual activity against planned activity and recalibrating the forecasted business results is a crucial task for the World Class selling organisation. In effect the results from each working day should equate to 1/220th of the annual business plan.

Meridian works closely with its clients firstly to understand the activity/results link and then to develop a KPI tracking system to support the right management behaviours. The shorter the time between uncovering a shortfall in planned activity and the requisite remedial action being taken, the more likely it is that business targets can be achieved.

Benchmarking internal and external performance

Many clients want to conduct an external benchmarking approach to understand how they stack up against the direct competition and the wider community of World Class selling organisations.

Through our extensive network, experience and research methodologies we are able to assist clients with their bespoke benchmarking requirements. Unlike many other functional areas, sales processes, systems and structures are opaque. By its very nature, sensitive commercial data is not readily available in the public domain. Creative solutions are therefore required to answer questions such as:

How do our competitors organise themselves?What are their routes to market?How many sales people do they have?What is their pricing policy?

Internal benchmarking is a very useful tool for measuring and managing differences in KPI's across, countries, divisions, teams or individuals.

Sales force effectiveness improvement systems

Optimising sales force effectiveness ensures that the investment the organisation makes in its sales force is maximised. Unsurprisingly, all our clients share a desire to achieve this!

Meridian is focused on the objective measurement of the impact of various investments made by the sales function. No single element works alone; there is an interdependency of relationships. These interdependencies need first to be understood and then tracked and analysed. In simple terms:

Are we engaging the sales force with the right customers?Are they performing the right tasks as effectively as they could?Is their selling time being maximised?

Where Meridian has helped clients design and implement systems to measure the above elements, management has been able to track the performance of individuals, teams, divisions and countries and benchmark performance. Significant insight has been generated enabling objective analysis of the relative performance of various investments. This insight then allows management to greatly reduce the risk involved in 'placing bets' on investments in the sales function and ultimately in customers.

With the use of such an approach, and given a discretionary lump sum to invest in the sales function, managers know where to invest to achieve the greatest uplift in profitable revenue. Ultimately, they can answer the question; "Is it better to invest in training, recruit more sales people, offer a larger trade discount or run a trade related marketing event to grow the 'top line'?".

Testing alternative routes to market / contact strategy

As the market changes and channels increase or decrease in strategic importance, so organisation's routes to market / contact strategy need to reflect this. What was an effective methodology 5 years ago is not necessarily the most appropriate now.

As an example of this direct FMCG sales forces have dramatically reduced in size as the retail trade has developed its ability to centralise buying decisions and automate stock replenishment. They have focused more on outsourced third party merchandising forces whose role is to report on &/or enforce compliance to head office agreements.

Business to business organisations have migrated far more selling activity away from a face to face approach and towards a telemarketing approach.

Meridian helps organisations challenge the status quo with data informed analysis to support hypotheses. We run tests to trial new models and prove or disprove to the organisation the validity of different approaches. Once understood, clients are able to move to a new model comfortable in the knowledge that they have minimised the associated risks.

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Through its sister company 20:20rdi, Meridian ISE has a worldwide strategic alliance with the Cosine group, and has associates working in Cosine’s office in the Netherlands. Cosine is part of the Omnicom group of agencies, and Omnicom is the second largest multi service advertising agency group in the world. This alliance allows 20:20rdi to leverage the group’s international scale and provide a local service, using local market experts and speaking the local language.

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Through its sister company 20:20rdi, Meridian ISE has a worldwide strategic alliance with the Cosine group, and has associates working in Cosine’s office in Germany. Cosine is part of the Omnicom group of agencies, and Omnicom is the second largest multi service advertising agency group in the world. This alliance allows 20:20rdi to leverage the group’s international scale and provide a local service, using local market experts and speaking the local language.

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Through its sister company 20:20rdi, Meridian ISE has a worldwide strategic alliance with the Cosine group, and has associates working in Cosine’s office in China. Cosine is part of the Omnicom group of agencies, and Omnicom is the second largest multi service advertising agency group in the world. This alliance allows 20:20rdi to leverage the group’s international scale and provide a local service, using local market experts and speaking the local language.