Territory alignment management is at the heart of any

Transcription

1 S A L ES & M A R K E TI NG I N SIGHTS Solving the Territory Alignment Management Challenge: Balancing the Need for Local Decision Making With Centralized Coordination Sandra Forero and Maria Kliatchko Territory alignment management is at the heart of any business-to-business company s sales operations. All of the key processes from sales force planning and deployment to incentive compensation and financial reporting depend on an efficient, automated alignment process. Changing market conditions and a mandate for increased efficiencies have caused many sales forces to morph from homogeneous teams with the same product bags and types of customers nationwide to teams with complex organizational structures and hierarchies operating in territories that reflect local market realities. These changes have made alignment management processes far more complex, yet alignment management systems have changed little.

2 Table of Contents 3 Introduction 4 What Makes an Alignment Management System Effective 5 Capture local knowledge 5 Balance headquarters and field requirements interactively 7 Manage alignment complexity 8 Ensure seamless integration 10 Conclusion 2 ZS Associates

3 Introduction Alignment management is at the heart of any business-to-business company s sales operations. It is the process that determines customer assignments, the design of sales territory footprints, which customers representatives should cover, product assignments and workloads in individual territories, as well as assigning personnel to positions. All of the key processes from sales force planning and deployment to incentive compensation and financial reporting depend on an efficient, automated alignment process. Changing market conditions and a mandate for increased efficiencies have caused sales forces to morph from homogeneous teams with the same product bags and types of customers nationwide to teams with complex organizational structures and reporting hierarchies operating in territories that reflect local market realities. Flexible deployments and multiple sales force roles including matrixed product specialists, account managers, or hybrid representatives are the rule rather than the exception. In addition, the availability of more (and more complex) data have further challenged central management s ability to make effective alignment decisions. These changes have made alignment management processes far more complex than in the past. Yet alignment management systems have changed little. Companies still use a combination of homegrown systems and -based processes that result in a manual, time-consuming and error-prone process. Outdated alignment management systems do not meet the needs of flexible, customer-centric sales force models. They often do not have ways to manage the associated complexity or capture the local knowledge that underpins deployment differences. In addition, many legacy alignment systems do not facilitate communication between the decision-makers required for an alignment change. And outdated solutions often do not accept and deliver data in configurable formats required to interface with other systems. Many existing alignment management systems do not handle change efficiently. A simple task like moving an account from one territory to another can take months from the time of the request to when the change appears in reports. Most important, using an outdated align- 3 ZS Associates

4 ment management system is extremely inefficient; it is common for a company with a large sales force to spend hundreds of thousands of dollars annually on vendors and in employee time coping with alignment changes. Figure 1. Often business conditions in the field create complexity that headquarters must manage. Figure 1 Field Headquarters Aligning Based on Local Knowledge Managing Complexity Balancing Local and Central Governance Seamless Integration With Other Systems In short, a good alignment management solution should be able to handle market complexity and local customization and put alignment processes into action quickly. In order to achieve that, alignment management needs to be effective in these critical areas: Capturing and sharing local knowledge Balancing local decision making and central governance Managing alignment complexity when exceptions are the rule Ensuring seamless integration What Makes an Alignment Management System Effective Complexity, localization and the pace of change have forced companies to seek alternate solutions to alignment management issues, and while any specific solution depends upon a company s particular situation, any effective alignment system should contain a few critically important capabilities. 4 ZS Associates

5 Capture local knowledge Regional sales force alignment entails leveraging local knowledge so companies can react quickly to market changes and capitalize on opportunities. An effective solution allows the field to analyze potential changes and request adjustments to geographic and customer coverage, product assignments and people assignments and the ability to capture the rationale behind those adjustments. The primacy of local knowledge has made these alignment features extremely important. For example, when a company receives preferred vendor status at a customer, headquarters may know that there has been a change, but needs local knowledge to react quickly, adjust customer coverage, and take full advantage of the status change. In this situation, a district or regional manager may want to reconfigure the geography and customer coverage. But in order to make these changes quickly, the company s alignment system must be able to incorporate information that representatives have gathered, but headquarters may not have readily available. It should also help district managers to determine the best product line, representative and customer assignments. Balance headquarters and field requirements interactively At the same time as it gathers local information, headquarters must optimize promotional spending and sales efforts, handle sales training, and manage other centralized processes that may require constraints on alignment decisions made locally. For example, consider a situation in which a company has several vacant positions in a sales area. Local managers decide they need to fill the positions immediately, but corporate headquarters may have constraints preventing hiring. And if headquarters decides not to fill vacancies, field management must figure out how to reassign customers /accounts to the existing field personnel. Alternatively, headquarters might initiate the hiring process and then involve the field team in a hiring decision, only to find out that local management does not feel the need for additional hands. 5 ZS Associates

6 This shows a fundamental problem with manual decision-making processes: If the field requests changes that cannot be implemented or headquarters makes decisions before considering requests from the field, those changes and decisions may be suboptimal. An effective solution should facilitate information-driven, real-time interaction between field requests and headquarters decisions. Communicating rules and constraints to the field when it requests changes and facilitating an effective approval workflow can help prevent requests resulting in a suboptimal outcome and ensure the integrity of the resulting alignment structure. Figure 2. An effective solution should facilitate effective, real-time interaction between field requests and headquarters decisions. Figure 2 HEADQUARTERS SETS BUSINESS RULES AND ESTABLISHES EXCLUSIONS AND EXCEPTIONS RULES Rule 1: Match accounts with Assigned = yes to GAMs with corresponding ZIP coverage Rule 2: Match accounts with Assigned = no to Hunters with corresponding ZIP coverage Rule 3: Match accounts with Assigned = yes and Product_value_A = yes, Product_value_B = yes, etc. to Product Specialists with Product_Coverage_A = yes, Product_Coverage_B = yes, etc. EXCLUSIONS Exclusion 4: Exclude accounts with Parent_ID = AABBxx Exclusion 5: Exclude accounts with Strategic_ID = yes EXCEPTIONS Exception 1: Add accounts whose Hunter_ID value = [null] Exceptions are validated against HQ rules Case 1 DM: Move account 325A421 into my district HQ: You are violating Exclusion 4. Cannot assign accounts where we have a special purchasing agreement with customer s parent company. REQUEST DENIED BY SYSTEM DM IN FIELD REQUESTS CHANGES AND REVIEWS IMPLICATIONS Case 2 DM: Move account 325A557 into my district HQ: You are trying to violate Rule 2: Unassigned accounts within a hunter s ZIP coverage area are aligned with corresponding Hunter rep. Are you sure? DM: Yes. 6 ZS Associates

7 An effective alignment solution must be able to show how a change will affect key metrics such as representatives workloads, a territory s geographic integrity, travel times and specialist coverage, for instance. That allows field teams to evaluate the viability of their requests before making them. It is also important that when considering changes, an alignment is represented visually on a map, so that those affected can easily understand the impact of the changes. Finally, a good solution should allow the exchange of different points of view as a company considers alignment changes. An approval workflow a sequence of signatures from field managers and headquarters to enact the change should capture not only approvals, but also the rationale, comments and questions surrounding the change. Manage alignment complexity Alignment complexity has grown to the point where it is impossible to manage alignment rules on spreadsheets or in the heads of a few key people. A good tool to manage the rules should provide a way for alignment managers to define rules in an easy, intuitive way, not to mention store and retrieve alignment attributes. These rules can be then sequenced to define customers, products and geographic areas assigned to each position. In addition, a good alignment solution should be able to report why a specific assignment was made for any given customer or account. This feature should help with investigations and fine-tuning of alignment rules. A company running even moderately complex territory rules can find itself struggling to keep chaos at bay without an alignment system that can handle complexity. For instance, a company s territory rules may look like the following (see Figure 3): 1. The company s sales organization consists of a team of generalist account managers and several smaller overlapping product specialist teams. In addition, the company has a team of focused hunter representatives responsible for developing accounts that are not assigned to either an account manager or a product specialist, within their assigned zip codes. 7 ZS Associates

8 2. However, the generalist account manager representative is responsible for building new business in unassigned accounts that are outside the geographic range (ZIP codes) of any hunter or product specialist. 3. The company also has a layer of additional account assignment rules that are governed by strategic relationships that may or may not exist with the parent company of those unassigned customer accounts. 4. Subsequently, the company creates a new category of product specialist representatives to coincide with the launch of a new product line. This new position requires the reassignment of some accounts that are covered by existing product specialists. Creating and validating such an alignment can be challenging and cause scores of errors. An effective solution should handle the complexity inherent in these alignments and avoid errors through effective definition and application of business rules. Figure 3. An alignment tool must be able to handle multiple, complex rules with ease. Figure 3 ASSIGNED ACCOUNTS UNASSIGNED ACCOUNTS Key and strategic accounts filtered out TEAM A TEAM A General Account Manager Accounts in geographic range of Hunter Reps filtered out Key Account Manager TEAM B TEAM B Specialist Rep Business rule-based customer transfer Hunter Rep TEAM C TEAM C General Account Manager Hunter Rep 8 ZS Associates

9 Ensure seamless integration Minimizing the time to market is one of the most important tasks for a sales organization: Whether it is launching a new product line, reacting to the competition or capitalizing on a new strategic opportunity, delays can translate into millions of dollars of lost sales. While current alignment change processes typically take two to three months, a proper solution should be able to reduce this time to a month (see Figure 4). Figure 4. Compressing the time to complete alignment processes is essential in a fast-moving, extremely competitive market. TASK OWNER LENGTH Define alignment rules Sales Ops 3 weeks Implement the alignment IT 3 weeks Load into field tool IT 1 week Field change requests Field 2 weeks Field management approvals Field 1 week HQ approvals Sales Ops 1 week Consolidation IT 1 week Package for downstream IT 2 weeks W1 W2 W3 W4 W5 W6 W7 W8 W9 W10 W11 W12 W13 W14 Alignment System Efficiency TASK OWNER LENGTH Define alignment rules Sales Ops 3 weeks Implement the alignment IT 3 weeks W1 W2 W3 W4 W5 W6 The rules are defined in the tool and do not require separate programming or loading. Step no Load into field tool IT longer needed Field change requests Field 2 weeks Field management approvals Field 1 week HQ approvals Sales Ops 1 week Consolidation IT 1 week Package for downstream IT 2 weeks Easy exchange of requests and approvals can help to combine these activities into a single block. Preparation of various extract formats can be done prior to having the final alignment. To minimize the time it takes to integrate an alignment into downstream systems, including sales force automation, incentive compensation and call planning and targeting, it is critical for the system to be flexible in regards to formats, timing and methods of data delivery. 9 ZS Associates

10 Different systems in the organization require different content. Some systems may require the most up-to-date dynamic alignment; others (like incentive compensation) typically need a point-in-time alignment. Finally, systems may have special requirements in receiving data. Some may require extracts or feeds; others prefer direct access to views in the alignment system. To accommodate these needs, a good alignment management system should provide information in multiple formats and layouts. It should also store and provide easy access to historical versions of past alignments for incentive compensation or research purposes, as well as allow the creation and sharing of future-looking alignments that are needed by resource and account planning applications. Having a single, flexible solution to supply all downstream systems with the alignment inputs can have a big bottom-line impact. For one company, we estimated savings of $120,000 per year (largely in downstream processes) solely from the consolidation of alignment processing. In addition, with the proper tool, sales operations personnel can save significant amounts of time that is currently spent on paperwork and manual processing of changes. For a company with two or three internal operations personnel (such as a deployment manager, alignment manager and an IC manager) and a few IT employees working on alignments, an automated, streamlined alignment solution can cut the amount of time spent on alignment 20%, or 1,000 hours annually. Conclusion Complexity, localization and the required pace of change have made alignment management a difficult challenge for business to business companies. Companies spend tremendous amounts of time and effort in reviewing and changing alignments, which diminish their ability to capitalize on quickly changing market conditions. While these problems are pervasive, there are practical solutions that can reduce alignment processing time and errors, while making alignment management more intuitive and user friendly. 10 ZS Associates

11 In order to accomplish these goals, an alignment system should effectively capture local knowledge, facilitate knowledge exchange between headquarters and the field, simplify management of complex alignment rules and provide integration capabilities with other enterprise systems. The need for improving alignment management processes is clear: the future of the sales operations greater organizational complexity, growing need for cost reductions, increased expectations for automated processes portends yet greater challenges in years to come. Complexity of deployment models and the need for flexibility and quick reaction to local market conditions will only increase. As they do, every company will have to start looking for an effective, efficient alignment solution. About the Authors Sandra Forero is Managing Principal for ZS Associates Commercial Deployment Practice, and is based in Princeton, N.J. She leads the firm s Territory Alignment and Personnel Placement practice area. Sandra has experience in a wide range of sales, marketing and operations issues. Sandra received a B.S. in business administration from la Universidad de los Andes in Bogotá, Colombia and an M.B.A. from the University of Virginia Darden School of Business. Maria Kliatchko is a Manager with ZS Associates in New York. She has worked with clients on a diverse array of issues, including alignment management, call planning, incentive compensation, data warehousing and business intelligence. Prior to joining ZS, Maria was a director at a major pharmaceutical company, where she was responsible for alignment and incentive compensation systems. She has a master s degree in computer science from St. Petersburg State University, Russia, and an M.B.A. from Columbia Business School. 11 ZS Associates

12 About ZS Associates ZS Associates is a global management consulting firm specializing in sales and marketing consulting, capability building and outsourcing. The firm has more than 1,300 professionals in 19 offices around the world, and has assisted more than 700 clients in 70 countries. ZS consultants combine deep expertise in sales and marketing with rigorous, fact-based analysis to help business leaders develop and implement effective sales and marketing strategies that measurably improve performance. As the largest global consulting firm focused on sales and marketing, ZS Associates has experience across a broad range of industries, including medical products and services, pharmaceuticals, biotechnology, high tech, telecommunications, transportation, consumer products and financial services. For more information on ZS Associates, call or visit ZS Associates inquiry@zsassociates.com ZS Associates, Inc All Rights Reserved All trademarks within this document are either the property of ZS Associates or their licensors.