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Restructuring sales processes to relieve revenue and margin pressure

B2B sales excellence effort yields higher account values with smaller salesforce.

Challenge

An integrated incumbent telco with a sizable B2B customer base was facing difficulties on revenues and margins as customers trimmed telecoms spending during the recent downturn. The company needed to improve sales-force efficiency while controlling costs. With that challenge in mind, the company contacted McKinsey to help it refine its sales processes to reduce costs and boost revenue.

Discovery

A brief diagnostic revealed a number of areas where the company could work more efficiently and achieve its growth targets. The McKinsey and client teams determined that improvements in two critical areas—sales-process effectiveness and bid and funnel management—were the most promising.

As in many industries, the salespeople at the telecom company were found to spend a fair amount of time doing non-sales-related work. Indeed, an analysis of the typical account rep’s day identified non-value-creating administrative activities that could be eliminated or delegated and underscored the need for time-saving tools. Time-saving process improvements included reducing the number of paper-based reports required, delegating more administrative tasks for large proposals to back-office personnel, having salespeople convene in the office one day per week to optimize efficiency and communication, and moving procurement processes online from paper requisitions.

When the teams turned their attention to bid and funnel management, a similar pattern emerged. The team recommended that a different, more automated process be used for small bids. This would free up more time for representatives to invest personally in closing larger deals. Consequently, the team created and implemented three tools that improved the overall bid/funnel process:

  • an automated tool reduced the man-hours needed to generate and track smaller bids
  • a centralized knowledge tool provided shared access to information about top products, such as features, pricing and key contacts, thus eliminating the need for individual salespeople to compile this data
  • a master calendar dedicated to tracking major deals optimized allocation of sales managers' time with important customers

With these changes and tools in place, the sales force had more productive weekly sales meetings and could allocate its time more smartly to hot leads and larger deals while in the field.

Impact

By removing unnecessary administrative activities and optimizing interfaces with sales-support desks, the sales organization was able to accomplish its ultimate goal—growing sales with a smaller sales force. The team saw an increase of productive time of sales personnel by 20 percent and almost double the number of customer visits sales people made, from 3.7 to over 6. They also accomplished an increase of 10 percent in the funnel value—the yield of prospects in stages from lead to negotiation in the sales funnel—in a 10-week pilot, and this improvement was maintained as the new processes and tools were rolled out to other regions.

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