Do Something!

Jul 31, 2008

"Don't Just Stand There, Do Something," has long been an axiom of American business, especially within the vitally active sales functions. Pharmaceutical companies have too much riding on the success of their sales efforts to become victims of the inactivity trap. A growing number of companies are looking beyond the performance charts to the underlying drivers of performance and then building an action plan based on disciplined analysis.

After all, what sales executive inside or outside pharmaceuticals hasn't puzzled over sales performance charts trying to divine a formula for raising revenue yield per sales rep? When it comes to raising overall performance, several stock answers come to mind: providing general sales training, having in place a robust on-boarding process, mentoring new hires, providing necessary resources, and so on. But how well do these techniques really work?

The chart below depicts the performance of the 100-person North American sales force of a global pharmaceutical company with yearly revenue just over $377 million. Sales reps in the top quartile posted average sales of over $5.5 million annually, compared to slightly over $2 million for the bottom-quartile performers. That's a fairly wide range. What accounts for such a variance in performance? What distinguishes the stars from the underachievers?

Looking at the performance curve raises several other questions. For one: How can a company increase the performance of every one of its sales reps? We know that a rising tide raises all boats. What "rising-tide" actions can be taken to raise performance across the board and within each of these quartiles?

In 20 years of research on driving up individual and company performance, Metrus Group has developed seven less obvious, more cost-effective recommendations for putting a company's sales force on that upward trajectory.

1. Set a Sales Strategy and Stick with It

If you examine what passes for sales strategy at most companies, you'll find that in many cases it's nothing more than a collection of time-and-territory management tactics. That's a big problem, because the last thing you want for a sales force headed in the wrong direction is for it to get there more efficiently.

Sales strategy begins with identifying the market, segmenting it, and deciding which segments are high priority. It includes deciding which products/services you will (and will not) offer each segment. It also requires identification and planning to develop the core competencies required to implement the strategy.

Sales strategies typically fail because they don't zone off what sales reps should not target. When William Crouse became CEO of Ortho Diagnostics Systems in the early 1990s, one of his biggest challenges was "deciding what we would not do and then sticking to it." He found that it was easy for sales reps to justify calling on a 200-bed hospital in the neighborhood, while avoiding the more difficult call on a 500-bed hospital that had been targeted. Crouse observes, "It's hard for salespeople to give up easy victories, even when they know those are not part of the sales strategy."

Difficult as it may be, setting a sales strategy, communicating it fully, and requiring reps to stick to it constitutes the bedrock for successful sales operations.

2. Reality-Test with Customers

Before setting sales strategy in stone, healthcare companies should head for the marketplace to test their customers' assumptions. Market research is a must, yet while many healthcare organizations conduct market research, they often fail to focus on customers' perceptions of the sales relationship. One East Coast physician expressed his frustration thus: "I don't understand why sales reps cannot get my concerns back to their marketing or management leaders."

One of the richest sources of information about customers' needs is sales reps, who, after all, are more likely to get up close with customers than are those who occupy the executive suite. In focus groups conducted for major pharmaceutical companies, Metrus has heard many comments such as this one from a Los Angeles sales rep: "I just listen to what they try to push down on us from above, and then I do everything I can to ignore it and deliver what the customer wants. I have the top sales numbers in my region."