Client Issue
Our client asked us to review their sales operating model to understand why sales productivity was suffering and holding back revenue growth in key strategic channels.
Our Commercial Diagnostic uncovered the following key issues:
Existing outlet segmentation model was 5 years old and not fit for purpose in helping segment the retail universe into distinct clusters to focus different commercial strategies. Furthermore:
It was not embedded as a key revenue growth management tool in making strategic and operational resource allocation decisions
It was based on historic volume performance, with no consideration given to future opportunity for core SKUs, or how different trade segments would impact revenue differently
The sales operation was not measured consistently against key sales force efficiency metrics, specifically time in call, visits per day, and visit frequencies
Only used on a broad national basis, and not broken down by specific trade clusters
Other sales metrics were weak and impacting overall company performance
Sales force strike rate too low (on route approx 25%; off route 20 – 50%)
Only 10-15% of time in-store devoted to selling
Clear look of success by channel had been defined but not how this would be broken down by outlet segment
What We Did
We built and implemented new outlet segmentation model as foundation for all salesforce resource allocation decisions. Model based on two dimensions
Dimension 1: Current company sales performance
Dimension 2: Category revenue potential
The model resulted in four key instore strategies for driving sales : Attack; Defend, Maintain, De-Prioritise
2. The outlet segmentation model provided the critical link between planning RGM strategies and directing the sales operation to deliver on these promises. Key areas of resource allocation were identified integrated in both the strategic RGM planning work, and as a monthly evaluation tool:
Sales force efficiency metrics: salesforce visit frequencies and time-in-call. The more important the outlet the more frequent the visits and more time spent per visit
Selling time & Strike rate: Minimum threshold set for both KPIs 50% and 95% respectively
Assortment: Three levels of core range defined by Gold Silver and Bronze level outlets, weighted towards increasing levels of SKUs in outlets with higher revenue potential
Trade Marketing Expenditure: promotional activity, merchandising materials etc. The more important the outlet the greater the TME per outlet
3. Built salesforce incentive model based on a focused set of Efficiency and Execution KPIs
Outcomes
Increased key metrics year on year
- Route compliance 56% to 89%
- Average number of Outlet visits: 12 to 20
- Strike rate from 23% to 52%
- Selling time from 14% to 45%
- Additional SKUs per order 1.7
Grew overall volume and revenue for target trade channels by 4.2% and 9.7% YoY