Capgemini Consulting the way we see it Sales Governance study How leading companies in the Nordic region steer and develop their sales organisation Table of content Executive summary 3 Study overview 4 Definition of Sales Governance and its elements 6 Overview – Sales Governance maturity 8 Sales Management 10 Sales Performance Measurement 14 Compensation and Incentives 18 Sales Coaching and Training 22 Summarising discussion and way forward 26 About Capgemini Consulting 28 © 2008 Capgemini Consulting. All rights reserved. the way we see it Executive summary Companies face many challenges in The four elements of Sales optimally steering their sales organisa- Governance have reached different tions. For example, this is often the levels of maturity. Sales Management case for more mature organisations in is the most elaborated element. But need of more structure. Usually this even though basic enablers are typi- need occurs after phases of business cally well defined, companies continu- growth with many sales initiatives ously improve the synchronisation of and less control, as well as after cost the strategic and operational levels saving phases when companies aim of Sales Management and enhance to steer their sales organisation more cross-functional co-operation. Sales efficiently. Performance Measurement is mod- erately mature, however, the defined Capgemini examined 42 leading Key Performance Indicators (KPIs) companies from different industries did not fully enable an efficient track- in Finland, Norway and Sweden ing and steering of sales behaviour. regarding how they handle Sales Gov- Due to the various Compensation ernance and the related challenges and Incentive models available, com- and best practices. The study was panies face challenges in optimising conducted through in-depth qualita- their compensation structure. Sales tive interviews and a quantitative Coaching and Training was seen as an online survey. The participants were emerging area. Sales Executives, mostly the Heads of Sales, but also CEOs or Business Area Even though the maturity levels vary Managers. between the companies and industries investigated, a common pattern exists All Sales Executives stated that Sales for Sales Governance. It is used rather Governance will become more impor- for controlling purposes than for driv- tant in the future. In addition, 86% ing the continuous improvement of of the Sales Executives anticipate sales performance. their group management to put more focus on questions related to Sales Overall, leading companies in the Governance the coming three years. Nordic region have the potential to further develop and improve their The Sales Executives saw driving sales Sales Governance models. To take productivity and reducing non-value Sales Governance to the next level, adding time as the major benefits of three main principles should be kept Sales Governance. In addition, Sales in mind: Integration of the different Governance enables best practice iden- Sales Governance elements, Cross- tification and implementation, and functional alignment and keeping a ensures an adequate sales behaviour. clear focus on the improvement objec- tives and benefits. Sales Governance study 3 Study overview Why a study on Sales Objective and methodology The Sales Governance Governance? This study examines sales governance framework creates the This study is part of Capgemini’s con- practises in leading Nordic companies “ tinuous research into the trends and and aims to identify related chal- necessary balanced, holistic issues in the business environment lenges, best practices and areas for perspective to optimise sales of our clients. Sales Governance has further development. To gain a broad effort and maximise results. been experienced as a very important understanding of the topic, the study topic by many Sales Executives. covered a broad range of industries. Sales Director, Energy Industry Companies face many challenges in optimally steering their sales organisa- During January-April of 2008, 42 tions, for example: representatives from Finland, Norway and Sweden participated in the study. • Having evolved to more mature The participants were Sales Executi- organisations, companies struggle ves, mostly the Heads of Sales, but to establish more structured and also CEOs or Business Area Managers consistent ways of working. (or equivalent). • Phases of business growth often result in new sales initiatives and A total of 35 in-depth interviews were less control of the sales organisa- conducted in addition to 21 online tion in terms of operations and survey responses. The qualitative costs. interviews followed a standardised • Expansion to new business seg- approach with open questions on ments requires a more thorough Sales Governance and its elements to and coordinated sales governance gain insights based on the statements model. of the Sales Executives. The quan- • Business complexity and the titative part of the study comprised number of interaction points have an online survey targeting the inter- increased due to a wider business viewed Sales Executives and other key scope, involving more customers managers within the sales organisation. and suppliers. • Phases of cost savings often result in pressure to run the sales organi- sation in a more cost efficient way. For companies from all industries, the elements of the Sales Governance Framework are key in actively driving the sales organisations towards effec- tiveness and higher performance. the way we see it Participating companies Figure 1 Participating companies per The interviews and online surveys industry were conducted primarily with large Other companies in the Nordic region. 50% Consumer Transportation of the participating executives were 10% goods 5% from Sweden, 31% from Norway and Retail 25% 5% 19% from Finland. Media 5% As seen in figure 1, the participating 10% Tele- 16% communication companies cover different indus- Manufacturing 10% tries to ensure a broad approach to 14% Financial and solid understanding of Sales services Governance. The main industries Energy are consumer goods, manufacturing, energy, financial services, and tele- communication. Among the participating companies, more than 90% have multinational sales operations including Finland, Norway and Sweden. Capgemini Consulting would like to express its sincere appreciation to the Executives who par- ticipated in this study. There was an enormous interest in the topic, and we hope you find our report thought-provoking and valuable. Sales Governance study 5 Definition of Sales Governance and its elements Sales Governance is defined as the Sales Governance is influenced by envi- method used by management to drive ronmental factors, such as the corporate the sales organisation towards effec- strategy, corporate culture, customers, tiveness and high performance and to and competitors. These factors can have promote a desired sales behaviour. It a constraining or encouraging effect on can be visualised in the Sales Gover- the development of each element, but nance Framework containing four dif- are not further examined in this study. ferent elements (see figure 2): Similarly, aspects such as sales strat- • Sales Management egy definition, sales process, and sales organisation structure are also not in • Sales Performance Measurement scope of this study. • Compensation and Incentives • Sales Coaching and Training Sales Management is the core element of the Sales Governance Framework. It There are strong links between all of entails both a strategic and an opera- these elements, and they can not be tional level. At the strategic level of viewed or developed separately. Sales Management, the sales strategy is aligned with the corporate strategy and short-term and long-term busi- Figure 2 The Sales Governance framework ness objectives are defined. At the operational level, the activity plan is implemented and managed as required. Corporate Strategy Cross-functional co-operation is a pre- requisite for achieving internal strategy alignment and operational efficiency. To support the strategic and operational levels of sales management and the cross-functional co-operation, four key enablers (forums, roles and responsi- bilities, processes and tools) need to be Sales Performance in place. Competitors Measurement Sales Customers Management Sales Coaching Compensation and Training and Incentives Culture the way we see it Sales Performance Measurement which are in most cases equivalent context of an overall model for sales is used to monitor how the sales to a monthly salary and a monthly training and sales career development. organisation is performing against or annual bonus. Incentives can be Trainings help to develop skills and the set targets. Performance meas- grouped into financial and non- competence through typically stand- ures are typically expressed as KPIs financial. Good performance is ulti- ardised course format. In combination and can be both, financial and non- mately defined by breaking down cor- with that, coaching is an efficient way financial. KPIs play a vital role in porate targets to an individual level for of encouraging salespeople to adopt the steering the sales organisation. In which performance can be measured. training content in their daily work. addition, they allow initiating correc- tive measures, if defined targets are Sales Coaching and Training is an at risk. Performance measures can be efficient tool in supporting individuals distinguished as leading and lagging. and groups to recognise