DEFINE CLEAR PERFORMANCE INDICATORS FOR EACH SALES JOB - DEFINE RESPONSIBILITY FOR SUPERVISION AND MANAGEMENT - BRING CLARITY TO THE CONFUSION OF SALES METHODS

PERFORMANCE INDICATORS FOR SALES JOBS (see our answer here)

Which indicators are REALLY key for sales success? Number of business cards collected? Number and volume of opportunities reported in the CRM system? Number of calls made to customers? Face to face time with customers? Travel expenses charged? CRM database updated?

Sales people are measured (and often harassed) by a multitude of performance indicators, as can be seen in the various "sales dashboards" you will find on the web.

Viewing sales as the "order manufacturing factory helps you to understand which indicators matter, and which are of no use.

RESPONSIBILITIES FOR SALES SUPERVISORS AND MANAGERS (see our answer here)

What are Sales Supervisors and Sales Top Managers supposed to do to do their job well? Help to sell key opportunities? Visit top customers? Analyze data of pages and pages of reports? (Some reporting systems have turned sales supervisors and managers into "slaves of reporting systems" forcing them to spend days working in spreadsheets. Is that what they must focus on to lead to sales growth?)

Viewing sales as the "factory of orders" lets you understand clearly who should to what in sales management.

END THE CONFUSION IN SALES METHODS (see our answer here)

"Pipeline Management", "Funnel Management", "Account Management", "Customer Relationship Management", "Opportunity Management" ... just a few of the terms being used for activities in the sales area. How do these terms relate to each other? Are they all the same with different faces? Which method works, and which does not? What is the purpose of implementing one of these methods? We are using one - should we keep it or use another one?

Viewing sales as the "factory of orders" helps to find answers to these questions.

SALES - THE FACTORY OF ORDERS <top>

In our work with clients we found that viewing sales as the "factory of orders" brings order into sales terminology - more important, gives you, the sales executive a clear picture of where your leadership is required to lead the sales system to improved performance.

(Click the picture for a full size downloadable version)

Like any factory, the "Factory of Orders" should be viewed as consisting of three levels:

Level 1: shop floor,
Level 2: supervision,
Level 3: factory management

Level 1: THE SHOP FLOOR <top>

On this level various "engines" are working (or should be working) to deliver the final output of this factory, "orders from customers". Let's go (as we should do, when studying a factory) "upstream" from this final output to understand the roles and methods of the "engines" in this factory. We find the ORDER FACTORY to consist of two main sections working closely interlinked: the Opportunity Section and the Product Section.

In the OPPORTUNITY SECTION<top>

The Opportunity Winning Engine: receives opportunities from the previous engine (where they have been selected to be addressed). The Winning Engine needs to run at a "success rate" of >50% for new orders to ensure that the cost model of the whole factory is acceptable. It's success rate is the prime cost driver of this factory. To ensure such performance by the winning machine this machine uses methodologies like "selling", "closing", "negotiating" to achieve its targeted success rate. Such methods are available abundantly and most sales organizations have already one in use.
The Opportunity Selection Engine: takes "raw" opportunities created in the previous engine and refines them to be "fit for winning". Its main task is to make the constraints visible which makes the "raw" opportunities "unfit for winning" and to resolve these constraints. It's main performance indicator is that every opportunity passed on to the Winning Engine must be "fit for winning". Methods from the toolbox of Theory of Constraints have proven to be most effective to run this engine.
The Opportunity Creation Engine: bases its work on deep understanding of the customer's business system and it's constraints and creatively designs opportunities which will contribute to the customer's efforts to resolve his constraints. Its performance indicator is the volume of opportunities it produces - when working as required it will continuously create more opportunities than is required to meet the sales factory's order goal. Classical sales focuses on the customer's share of wallet (his budgeted expenses). Focusing on sales as a business system the focus will be on creative design of new opportunities - which goes far beyond the customer's wallet. Some methods of "account management" point in that direction, however, TOC tools have proven their merit as the methodology to operate this engine most successfully.

The PRODUCT SECTION must work in the framework of a "Phase Review Process" with the goal to achieve each product's sales goal. (We use the term "product" here for all products, services or solutions offered to customers). <top>

The Product Test Engine: ensures that any new product is "fit for the Opportunity Section" at product introduction and throughout the whole product life cycle. This means the product will be fit to create new opportunities, fit to make opportunities "fit for winning" and "fit for easy win". As it is the last engine in the product section its main performance indicator is the achievement of product sales goals. To ensure that it can deliver this goal it "pulls" feedback from all later engines in the factory.
The Product Design Engine: builds products "fit for testing". Its charter is to design products "fit for all later engines" to ensure that there is no rework at all, when the product arrives there. Like the Product Test Engine it "pulls" feedback from all later stages in the factory to ensure that it will meet this requirement.
The Product Planning Engine: creates plans to design and test products, again with the goal of achieving product sales goals and by "pulling" feedback" from all later stages of the factory. (For example: if product planners are not participating in work in the Winning Engine they fail to do their job as required for smooth factory operation)

Level 2: SUPERVISION <top>

Each of these engines on the shop floor needs guidance by supervision - to ensure that the order factory runs as a smoothly integrated and well tuned entity. Its main role is to ensure that each engine achieves its goal. If an engine fails to deliver to its performance goal supervisors must intervene instantly and correct the situation. If that critical element of manufacturing supervision is missing or not done well any factory - even more so the dynamic and complex "factory of orders" will not deliver to its goal. <top>

Level 3: FACTORY MANAGEMENT <top>

On this level top management manages the "order factory" as a "business system". To do so top management must:

Develop a deep understanding of the "order factory's system", (as DEMING and many others have pointed out for manufacturing systems many years ago),
Set the goal for this system and continuously track, visible to everyone working in the factory, progress to this goal,
Find the constraints which block progress to the goal,
Plan the resolution of these constraints,
Personally lead the operational execution of these plans.

With the "order factory view" in mind here are the answers we are offing to the questions raised at the beginning of this article: <top>

PERFORMANCE INDICATORS FOR SALES JOBS

The view presented above shows that we need to observe and manage one single performance indicator for each engine in the order factory. If each engine delivers to that indicator the factory will deliver the sales goal.

RESPONSIBILITIES FOR SALES SUPERVISORS AND MANAGERS

Supervisors in the "order factory" must ensure that the engines in their responsibility deliver to the performance goals described. That is a tough job. The "order factory" is probably the most dynamic and complex business system in the enterprise and needs first class supervisory expertise to achieve these performance indicators,

ENDING THE CONFUSION IN SALES METHODS

"Pipeline Management", "Funnel Management", "Account Management", "Customer Relationship Management", "Opportunity Management" ... these terms describe methodologies for some engines on the shop floor (in spite of the abundant use of the term "management"). Their value must be determined by one simple standard: Do they deliver the performance goals for each engine? Yes? - leave them in place. No? - replace them with a method that will deliver. <top>

PROJECTS ON TIME, IN BUDGET <top>

By Richard Smal, Partner, THE BPI GROUP

WINNING IS GOOD - DELIVERING IS BETTER - 60-80% OF PROJECTS FAIL - PROJECT MANAGEMENT TOOLS NOT THE ANSWER - CRITICAL CHAIN PROJECT MANAGEMENT DELIVERS 95% RELIABILITY OF MULTI-PROJECT EXECUTION

In business-to-business sales "orders" are often delivered in form of projects with committed end results "on time", "in scope" and "in budget". Hefty penalties are due if the supplier does not meet one or several of these conformance criteria.

WINNING THE OPPORTUNITY IS GOOD - DELIVERING WHAT HAS BEEN PROMISED IS BETTER

Great. Congratulations. We have won the opportunity. Now how are we going to deliver? How will we lead the underlying project to its committed goals in time, scope and budget?

Even more: now we have won TEN orders, and must deliver TEN projects at the same time ... how are we going to successfully lead all of them to success?

60-80% OF PROJECTS FAIL

Unfortunately, the majority of such projects are delivered late, with limited scope or run over budget. This is damaging to both the customer (by not achieving their own project goals) and to the supplier (by facing penalties, overspending and loss of customer trust). (Depending on the source between 60 and 80% of management projects fail - see for instance the IT CORTEX Report on failure rates in I.T. projects or the extensive report in THE ECONOMIST, June 11, 2005: “Overdue and over budget, over and over again”)

PROJECT MANAGEMENT TOOLS NOT THE ANSWER

Most project managers these days use tools to plan and manage their projects. However, using these tools does not seem to improve the success rate of projects.

CRITICAL CHAIN DELIVERS 95% RELIABILITY OF MULTI-PROJECT EXECUTION

E.GOLDRATT was one of the first writers to point out that we must go far beyond project management tools to increase the success rate of projects - by applying constraint management to projects in the form of CRITICAL CHAIN. The CRITICAL CHAIN method is based on understanding of human behaviour, the cause-effect of current (multi) project management techniques on individuals and organisations and concentrates on resources that determine the delivery of the project. The result is increased control on the lead time of complex projects and increased reliability. Some of the users worldwide are: US Navy, HP, Lucent, Bell, Seagate, and Medtronic among others (see more about CRITICAL CHAIN and companies using it at GOLDRATT UK)

DELTA INSTITUTE's partner THE BPI GROUP helped clients worldwide to use CRITICAL CHAIN extensively to deliver projects on time, in scope and budget - achieving 95 % reliability of (multi) project execution.

Richard Smal, expert in CRITICAL CHAIN is at your service to answer any questions you might have.

UPCOMING WORKSHOPS<top>

DELTA T-Selling (R) Consultants School (English)

The one-week training course for DELTA T-Selling(R) Consultants

April 16-20,2007 - Geneva, Switzerland

Leading Key Account Sales Organizations (English)

The two day top management workout - how to lead key account sales as "the order factory"

May 9-10,2007 - Geneva, Switzerland

Sales System Management (German)

The two day top management workout - leading sales as a company wide business system

March 21-22,2007 - Graz, Austria

June 28-29, 2007 - Graz, Austria

FINALLY: LOGIC TREE TOOL<top>

Those of you who have worked with us on "logic trees" (for example, for operational planning) will remember that it takes quite some effort to create - and more even so, to keep updated - these graphs. FINALLY we have found a tool which makes this work easy, smooth and simple:

TRANSFORMATION LOGIC TREE (TLT) is a new powerful software tool created for TOC Thinking Processes. TLT has been designed with input from H. William Dettmer, author of "Goldratt's Theory of Constraints," and Dr. James Holt, a leading TOC educator at Washington State Univ. So, it is consistent with the stylistic standards of the Thinking Processes.

At this point in time you can download FOR FREE the improved beta version 0.8.8. Version 1.0 will be available for sale at a low price by Sept. 07. Your involvement and support is enabling our improvement and release of this tool. While the vast majority of our users are from the corporate sector, TLT has been used in classes at Washington State, Clemson Univ., and Loyola Univ. Chicago.

Here are the key features of TLT:

TLT is useful for anyone who is seriously building trees (or other diagrams such as flowcharts).
Say goodbye to off-page connectors - TLT is perfect for developing and presenting large diagrams (e.g., 3 pages wide and 5 pages high and easily expanded or shrunk as the tree develops).
It prints well (WYSIWYG), generating large posters by tiling standard size sheets, avoiding the need for a plotter.
TLT automatically generates a Glossary Work Sheet that lists all entity contents on any Work Sheet in the WorkBook. In addition to standard copy/paste editing,
TLT has “linked” entities that maintain consistent content while appearing on multiple trees (especially useful when you are using all the Thinking Process tools). Edit one and you have edited all linked entities.
TLT’s novel “Document Explorer” has powerful search/find and “jump-to” capabilities that you’ll love.
TLT graphics can easily be pasted into Word, PowerPoint, Excel, etc. to be integrated into reports.
Finally, TLT has a Presentation Mode that allows you to present large, complex trees, dynamically highlighting entities with a single click as you work your way through a tree.

For more information and download contact:
Mark Van Oyen, President and CEO of Transformation Logic Tree, Inc.
http://www.transformation-logictree.com/
email: TLTsales@transformation-logictree.

ENJOY: MUST VIEW VIDEO CLIP<top>

Never before have we seen a video clip so well done ... about sales and the rest of the company. (You will enjoy even more if you have seen the movie A FEW GOOD MEN). Enjoy!

Link removed by YOUTUBE in 2008