The Magic of SALES FORCE EXCELLENCE

SFE Framework
There are number of reasons for creation of SFE role and also for its increasing
importance. Dedicated SFE roles started appearing due to changing landscape especially in the
pharma industry. By definition, sales force is an expensive and finite resource. In the post
blockbuster age, the cost of sales reps has been increasing but their contribution to both sales
and margins was going in the opposite direction. As a result, sales teams started shrinking -
sometimes gradually, other times abruptly, however the need for an interaction with customers
remained. These smaller teams now needed to get in front of not every customer but in front of
the right customer and with the right message. But how do we know who is the right customer
and if sales teams are operating in the right geography? In the past “gut feel” was often enough
to create and align territories but selection of customers and geographies has moved from
qualitative to become dependent on increasing amount of data – i.e. quantitative. Sales
management does not, and neither should, have skills to manipulate and mine data. This task
initially was given to analysts but with increasing frequency and complexity of demands, this
skill was packaged together with other areas of expertise and a new job function was created.

SFE or Sales Force Excellence is often invisible but a strategically important function which
creates and maintains framework and provides tools for sales force to successfully implement
marketing strategy. This implementation is manifested by achievement of predetermined
metrics (usually sales and activity related) for which sales force is appropriately rewarded.

Role of SFE is aligned with commercial organisations. Its importance lies in the maximisation of
effectiveness of the company sales force both in terms of their conduct in front of customers,
the tools they use to understand their business and how they are rewarded for their
efforts. SFE requires Marketing and Sales functions to be fully integrated, where sales
implements marketing strategy, however in the process in collects market intelligence which
marketing then uses to develop a new marketing strategy which in turn is again implemented
by sales force. Clearly defined sales cycles play a major role in this revolving process. SFE must
be fully aligned with the marketing/strategic plan.

SFE role should not be a passive back office reporting role but an active member of a
commercial strategic team. SFE role operates within SFE framework – often a document that
interprets marketing strategy in terms of structures that SFE will put in place to implement the
strategy. Elements of the framework are described next.

Territory Alignment and Sizing

Territory alignment refers to allocation of customers to each territory. Usually territory
alignment should be done at the beginning of each sales cycle, however by definition, territory
alignment cannot happen unless Segmentation is completed. This paper assumes established
sales team is in place and segmentation and re-segmentation is a continuous process. For
established teams, this activity is more of a tweak rather than a full blown geographical exercise
and its aim is to ensure that each territory has an appropriate segment mix, i.e. mix of
customers as referred to in the next section. Sales force sizing also needs to be considered at
the beginning of every cycle and forms part of territory alignment.

Creation of new teams is a completely different exercise and it needs to be done in line with
marketing plan and supported by external data, geographical data and size of budgets play a
significant role in the initial development of territories. MapInfo Pro or Google Maps are handy
tools for this exercise.

Segmentation
Segmentation refers to grading of customers based on their importance to the
business. Marketing plan needs to be consulted for direction. Customer segmentation will
naturally vary from business to business and will also depend on the level of complexity that
may be introduced, but at the very basic level, customers, especially in the healthcare industry
can be segmented into the following broad categories:

· Retain high priority

· Retain

· Grow

· Acquire

· Ignore

A 3x3 Affiliation vs. Propensity grid can be used to achieve above segmentation, with
Propensity (total potential value) mapped along X axis and Affiliation (strength of relationship)
along vertical Y axis. The 3x3 grid can be achieved by assigning Low – Medium – High segment
to each axis. As a result a High Affiliation and High Propensity customer is assigned the “Retain
High Priority” or Supertarget category.

Segmentation is necessary not only for understanding one’s territory and individual customer’s
value, but it is especially important because each segment needs to be approached with
different levels of activity and, most importantly, different types of strategy and
messaging. Clearly, a business plan to “Acquire” a customer is different to a business plan for a
“Retain” customer.

Segmentation data comes from various sources and some of it is subjective by nature.
Propensity (i.e. total potential size of customer) is quantitative. It can be based on total sales
value, number of procedures or number of scripts written among others and propensity should
always relate to the Total in the market (including competitors) rather than total current value
to th company. We aim to assign “Acquire” or “Grow” to large customers who are at present
aligned with competitors rather than our business. This data usually come from third party
providers such as IMS. It is possible to use in-house data of a non-genericised widely used
product to calculate customer size relativity and use that as propensity data.

Affiliation can be both objective and subjective – it can be a total customer spend, number of
product lines committed to, which is the highest position we have a relationship with, length of
time remaining on current contract or sales growth. In every case Affiliation relates to some
measurable level of customer’s commitment to the company.

There are hundreds of other criteria that can be used to segment customers and this depends
on type of industry, nature of customers and accessibility of customers, among others.

Targeting
This follows segmentation and refers to how each customer segment is approached (see call
mode below) and how often (see frequency below). Most important is to consider what
message sales team use for each customer segment and hence targeting should be, if
applicable, different for each customer segment. Strategic plan should provide direction. Key
Performance Indicators are good levers to use for sales team guidance towards optimum
targeting of customers.

SFE Key Performance Indicators

KPIs are linked to targeting and segmentation. There are 4 widely used indicators:

· Coverage

Refers to percentage of customers that needs to be contacted in each segment during a

cycle. For example, if Supertarget coverage is 100% then all customers assigned Supertarget
grade must be contacted. Coverage % usually decreases with decreasing customer importance.

· Frequency

Frequency refers to how often customers in each segment are contacted. More important
customers may require 2 face to face contacts per month. Small uncontracted customers may
only require one visit per quarter, however Acquire customers may require a varying frequency
depending on acquisition plan.

· Days in Field
Number of days each member of sales team spends in the territory (i.e. in front of a
customer). All Sales rep time should be accounted for and it can be classified as:

· On-territory and available – actual time spend in front of customers

· On-territory and not selling. Following types apply: Admin, AM-mentoring, computer
repairs, national/state projects, performance appraisal, travel time.

· Off-territory, unavailable. This includes Annual, compassionate, other, sick, study, day in
lieu, induction, National conference, Part Timer, Public Holiday, Sales meeting, Trade show and
Training

Each industry has optimum days in field and taking weekends, annual leaves, public holidays,
conferences and sick days into consideration, the number should be around 17 days in field per
month.

· Call rate

This is a product of previous three KPIs and it refers to number of face to face equivalent calls a
sales rep needs to make. For example, if a rep has 200 customers on territory (segmentation)
and a required 80% (coverage), customers need to be seen once per month (frequency) and
there are 17 days in field in the month (DIF) then the theoretical call rate is:

200 x 80% x 1 / 17 = 9.4 calls per day, which is too high. Segmentation and / or coverage will
need to be adjusted to achieve a more realistic call rate.

Call rate varies significantly depending on customer e.g. for pharmacies and practitioners call
rates are higher than for specialists.

Call mode
Face to face is not the only way to contact a customer. There are different ways to interact with
customers and some types of contact, call modes, are more effective than others. More
effective call modes should also carry a higher weight. Each call rate is a combination of
different call modes. These include (with weighting recommendations):

· Face to face = 1.00 (physical interaction)

· Low service call = 0.5 (physical visit, but target contact not present, low value)

· Remote = 0.25 (e.g. phone call)

· Literature drop = 0.10

· Customer training = 2.00 (4 hours customer training on-site)

Call modes and their weights should be reviewed every cycle. Purpose is to make them relevant
and effective. At times value of Remote may be increased but with a daily limit. New call modes
may also be introduced depending on required sales rep activity. (e.g. literature drop may not
apply every cycle)

Continuous Market Intel Collection

Sales teams rely on a good target list. This is a short list of customers to call on and it has been
developed through sometimes elaborate segmentation and targeting of much larger customer
databases. As segmentation and targeting are often based on third party data (expensive and
can be out of date) it should be in each sales team’s interest to validate the list and to make
sure that the list is relevant. This is where continuous market intel collection activity is
important and where sales team plays a key role through their intimate knowledge of
territories and customers. Continuous market intel is a collection of small pieces of information
during each customer visit by a sales rep. Said intel could be info about customer, competitors,
activity, pricing and many more. Such combined data if collected over time is a valuable source
of information which not only validates third party data, it is used to achieve better targeting
outcomes and can also provide vital input into company's marketing strategy. In numerical
terms, a sales team of 20, where each rep visits 3 customers per day can, over one month,
collect over 1,000 pieces of valuable data. This is a continuous process – start with target list,
collect market intel, develop new target list, validate through market intel etc. Market intel
collection is usually done on an ad-hoc basis but it can also be structured via short term
campaigns. This is where sales teams are issued with a short list of questions to either ask a
customer or to make an observation.

Incentives
SFE role is responsible for writing and administering incentive policy for sales teams. Policy
should be clear and specific allowing no room for multiple interpretations. Policy should also
specify number of variables that are available for modification every sales cycle. Flexibility to
modify incentives from cycle to cycle is key to responsiveness of the sales team to sudden
changes in the market.

Some of the issues that need to be taken into consideration when considering incentives:

· Frequency of payment (monthly with a quarterly roll-up)

· Threshold (Target achievement % at which incentive calculation starts, e.g. 95%)

· New starters (when do they become eligible)

· Incentive segments and their weightings

· Base vs. target products vs. new launches

· Communication

· Calculation

Other Milestone Achievement Awards

Consideration should be given to creation of ad-hoc awards (with a small financial reward) for
the sales team such as:

· Highest growth vs. last quarter

· Highest growth vs. same quarter last year

· First to achieve annual target

· Best launch products excellence

These awards should be communicated to the sales team prior to the start of the applicable
incentive period and SFE role provides strategic input as well as calculation methodology and
tracking.

Coaching
Refers to ongoing coaching of sales team and is an essential requirement that needs to be
factored into the sales team routine. It is either performed by a dedicated role or by sales
managers themselves. In practice, coaching requires qualified person, together with a sales
rep, to spend enough time in territory and in front of customers to be in a position to prepare
an assessment on the sales rep against predetermined set of criteria. The criteria may include
among others:

· Sales techniques

· Customer knowledge

· Product knowledge

· Teamwork

· PC and IT knowledge
· More general including behaviour and appearance

After coaching session, sales manager needs to discuss results with the sales rep to point out
areas where either expected behaviour was achieved or where development is
required. Significant gap between expected and achieved criteria may require a personal
improvement plan and more frequent coaching until desired outcome is achieved. Structured
coaching provides excellent material for end of year performance assessment.

Coaching time should be between 4 – 8 hours per session, i.e. between ½ and 1 full day in field
and needs to be performed at least once during a sales cycle.

Targets
In the minds of sales force, target is the most important number. Sales target must be seen as
objective, unquestionable and linked to the company’s overall strategy. SFE is often involved in
target development and reporting. The following needs to be considered in order to formalise
target setting process:

· Methodology of calculation and link to Company Budget and strategic direction

· Basis of calculation i.e. link to Company Budget or other high level measure

· Communication

· Sign-off

· Quarter to quarter changeover

· Quarterly vs. Annual target

· Inclusion of major events in targets – methodology

· Sales Manager and Key Account manager targets

Reporting
Reporting is key is a key function of SFE role. Everything that falls under responsibility of this
role and is measurable should also be reportable. Most likely CRM that’s in place has the
functionality to generate number of territory specific reports or reports for management. Most
common areas that CRM reports cover are:

· KPIs – generated from activity data

· Sales Incentives – generated from sales reports and measuring achievement vs. targets

· Coaching – generated through additional CRM capabilities

· Any other incentive related reports – based on client specific data

Key to SFE role’s credibility with its sales team lies in its ability to promote transparency. To be
more specific this relates to transparency in reporting, transparency in use of methodologies of
calculation and transparency in timing.

There is a different suite of reports that are generated for to the sales team versus reports for
management.

Training
SFE role conducts regular training either in a workshop setting or during field visits. Training
performed by SFE includes:

- Management CRM training (workshop). It is essential that stakeholder

management understands capabilities of CRM and is invested in it

- Sales management CRM training (workshop). CRM skills of line managers must be at least
as good as of the sales team itself. This training assumes train-the-trainer approach where sales
managers continuously improve sales team’s skills during coaching and field visits

- Target setting process and KPIs. (workshop or group sales meetings). As sales team’s
performance assessment and incentives are linked to these measures, it is in sales team’s
interest that it is fully familiar with them. I also recommend that the target setting process and
KPIs setting process are both transparent and have sales team’s buy in prior to launch.

- Sales team in field training. As part of field visit, SFE role conducts a wide range of
training on services and tools that created or maintained by SFE role. This may include practical
tips on CRM use, spreadsheet skills, general IT and PC skills, tips on how to use specific tools or
reports and concept training – e.g. ways to collect market intelligence

Above training is done on a continuous basis and workshops should be conducted periodically;
e.g. management CRM training – annually and rest during cycle meetings.

Other Training and Induction

Training (as opposed to coaching) involves product training, sales techniques courses or IT-
related education e.g. on CRM. Most training is not usually performed by SFE role itself,
however trainers may be part of a wider Sales Force Excellence team. Training and training
course schedules are often created and published in conjunction with SFE as training days affect
KPI metrics including DIF.

Sales team induction is managed by Sales Manager together with sales trainer. SFE principles
need to form part of sales team induction.

Tools used by SFE

Most important tool that SFE manager relies on is CRM. CRM (Customer Relationship Manager)
software can take different forms and over time it has evolved from a paper based version
through spreadsheets, then various types of contact manager programs on a PC and finally
through ETMS (Electronic Territory Management System) which also resided as a program on
laptops. CRM itself evolved from a PC-based program to a comprehensive web-based
application. There are number of CRMs available, each with their own unique advantages, some
CRMs are industry specific, some are suitable for small business environments, while others are
comprehensive and fully customizable. Most ERP software suppliers now offer their own
version of CRM. Number of websites offer CRM comparisons, for example
https://crm.financesonline.com/ is good source of information. At very basic, SFE roles requires
CRM to have the following properties and functionality:

- Customer list

- Contact list

- Interaction entry against contacts

- Product list

- Opportunity maintenance against customer and product

- Reporting module

Above list includes only minimum requirements. More commonly, CRMs include great deal
more functionality including dashboards, KPI calculations, workflows, alerts, announcements,
document repositories, chatter rooms, mailout functionality, sales reporting, time tracker and a
lot more. Popular web-based CRMs also have app stores with third party add-ons similar to
more familiar iTunes and Google Play.

Next important tool for SFE role is a Sales reporting software followed by a mapping tool.

Finally, since SFE is a higher version of a financial analyst role, advanced spreadsheet skills are a
must and good database skills are definitely an advantage.
Local Annual Sales Awards
Annually, sales teams get together for an evening of awards. As a very prestigious achievement
which may carry a significant financial benefit, the process and criteria of evaluation should be
clear and transparent. SFE role provides strategic input and also final calculations. Serious
consideration should be given to the following:

· Which achievements will be awarded at the end of the year and their ranking

· Eligibility (e.g. minimum 9 months in territory)

· Criteria and calculation

· Communication to sales force at the start of the year

· Communication to the Company

· Communication to the Region

Regional or Global Awards Nominations

Many companies recognise best of the best and have an award system in place to recognise
outstanding achievement on a regional and global scale. These awards are prestigious and
often carry significant financial benefit, overseas travel and involve regional/global visibility and
communication. This process is often co-ordinated by global or regional SFE and they rely on in-
country SFE roles for input and local co-ordination including nominations. SFE role needs to
take ownership over formalisation of the process of nomination, process of communication and
collection of data.

Brief guide to Implementation of SFE

Adoption of SFE and CRM, just like any behavior - disrupting activity, requires a process of
culture change to be successful. It requires involvement of the whole commercial organization
(and more) and it must be continuous. I recommend following steps to successfully implement
(launch and maintain momentum) SFE strategy:

- Management strategy and buy-in. This includes information session on capabilities and
limitations and presentation of strategy with a flexibility to tweak it in order to secure
management buy-in. This step includes securing every manager's commitment and ongoing role

- Sales team launch. Initial workshop involving senior management where MD (or
equivalent) outlines global and local commitment, Sales management specifying their
expectations and commitment and SFE role with their expectations and details regarding
support

- In-field follow-up. This is done by dedicated roles (sales manager, SFE manager, training
role) within couple of weeks of launch. Involves Q&A arising from difference between real life
and theory, feedback and reinforcement of agreed practice

- Management leading by example. Continuous reinforcement during team meetings, team

calls and field visits by management. Must include management use of CRM, usually after field
visit, to record interaction with customers

- Short training sessions focusing on reinforcement, best practice and Q&A at national or
cycle sales meetings - at least quarterly

- Ongoing commitment to improvement in relevance and functionality, via regular

newsletter. This should include specific examples where improvement e.g. via feedback was
achieved.

Position of SFE within Organisation

SFE is, by nature of its pivotal influence, no longer a number crunching invisible role. It is a
senior strategic and pro-active function that influences both the sales teams as well as the
highest levels of the organisation. While the role involves numbers, it should not be part of
finance and even though it is heavily involved with sales teams it should also not be part of a
sales organisation. Best organisational hierarchy position for SFE is either as a direct report to a
Business Unit Director or Managing Director.

Responsibilities assigned to an SFE role are still evolving and this is also due to recognition of
the contribution that SFE role, and individuals in this role, make to the organisation. SFE role is
increasingly involved in Market intelligence which includes capture, collection, interpretation of
large amount of market, customer, competitor and product data.

Final SFE thoughts – Excellence vs Effectiveness vs Efficiency

E in SFE stands for number of things. Which one is correct? Here is my view:

SFE is all about Effectiveness and Efficiency, where one contributes to the top line and the other
impacts bottom line.

EFFECTIVENESS ensures the right message is delivered to the right customer and right number
of times – appropriate coverage will result in a positive impact on sales, market share or
increase in the value of a customer relationship.
On the other hand, EFFICIENCY means right allocation and distribution of the diminishing but
expensive resource – the sales rep, and making sure organization’s investment in this area is at
its optimal level. Too many reps create costly duplications while undersized team will ensure a
failed campaign due to being spread too thinly and inability to deliver the message.

When effectiveness and efficiency come together we have EXCELLENCE and that is what SFE is
ultimately all about – SALES FORCE EXCELLENCE – a strategically important role in any company
that uses a message to sell a product or service through a sales team.

More recent developments point to a further development of this role to a function termed
COMMERCIAL EXCELLENCE, which is even more comprehensive, senior and more involved with
implementation of best business practices and processes. The role includes traditional SFE
responsibility, however it may also include process improvements, pricing analysis, portfolio
optimization and other initiatives that seek to maximize top and bottom line growth.

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This paper is written based on experience in primarily pharmaceutical industry, which has for
decades extensively and successfully utilised concepts of customer segmentation and
targeting. These have more recently evolved into a separate function, the SFE. Customers
referred to therefore come from the area of healthcare: hospitals, clinics, pharmacies as well as
individuals, such as general practitioners, pharmacists and numerous categories of specialists
such as oncologists and cardiologists. Concepts of SFE can however be adopted for any industry
that sells and markets its products through sales teams.

Andrew Blum 2017