Here’s THE Tool To Challenge A Sales Manager

What’s the #1 thing a company chases? Well, some would argue profits or value creation and while that wouldn’t be too far off it starts somewhere else. 

“The top-line!” 

The simple reason is, of course, that without sales there’s nothing to make profits on. This often gives the sales department a special status in the company where without much challenge they can go after any sale they want. It’s often said about sales that they only care about revenue and not profits but can we blame them? That’s after all what they’re hired for! However, we need tools to challenge Sales hence the finance business partner’s toolbox should be stuffed with analyses that can help Sales make the right sales. That’s why next up in the Finance Business Partner Toolbox Series we cover the Pareto curve which much like what we showed last week with the whale curve is a way of ranking your customers to show that most of them don’t impact your top-line significantly. 

Would you dare to drop 80% of your customers? 

First let’s briefly explain how to create the Pareto curve. It’s very simple actually! 

1. Rank your customers based on the revenue you make on them.
2. Plot them into a bar chart with the customer with the highest revenue first and forth running 

Then you get something that looks like this.

Of course, just because you’re number 1 in revenue doesn’t mean you’re the most profitable customer. It also doesn’t mean that it’s the customer that Sales spend the most time on. While we covered the profitability angle last week in “How Finance Business Partners Cut Up A Whale” we will cover the term cost-to-serve this week as a proxy for how Sales should spend their time. The Pareto curve is your starting point for asking questions like “Why do we spend time on selling to customers that give very little revenue?” or “How does the revenue distribution fit the way we segment our customers?”. You can also start calculating various ratio’s like sales calls per 1 mUSD revenue or orders per 1 mUSD of revenue. From asking the questions and calculating various ratios you’ll start building insights about the cost to serve. 

Can you answer how to deploy the sales force most effectively? 

Now doing this kind of analysis might not make you a Sales Manager but it could make you best buddies with the Sales Manager. (S)he should mostly be focusing on coaching sales reps and translating the overall sales strategy into execution on the ground. Likely (s)he’ll throw sales reps at wherever the strategy is directing them but without knowing the effectiveness of doing that. That’s where the finance business partner should bring the newly developed insights into play to help the Sales Manager understand the effectiveness of the sales force. Here are some of the things you should help the Sales Manager understand and make recommendations towards improving. 

• Are we using the correct sales approach to each of our segments i.e. “premium” gets more attention vs. “discount”?
• Are there customers where we keep making sales calls without earning any revenue?
• If we redeployed our sales force to where we earn most revenue per sales call how much extra revenue could we potentially earn?
• Can we use previous customer buying patterns to predict if we redeploy the sales force according to revenue per sales call what is the optimal number of sales calls per customer?

There are likely many more questions that could be asked which would help the Sales Manager earn more revenue at same or even lower cost. It could also help the Sales Manager build an investment case for getting more sales reps. Not a bad value proposition to bring to your Sales Manager, right? 

How are you supporting Sales with insights in your company? Do you use any specific key metrics to gather insights on how the sales force is performing? Are there other analysis tools that you can recommend using to challenge Sales on their performance? 

This was the second article in the Finance Business Partner Toolbox series where last week we looked at the Whale Curve and previously we’ve looked at how benchmarking can be used to develop various insights. 

Anders encourages you to take a tour of his past articles on finance transformation, finance business partnering and not least “Introducing The Finance Transformation Nine Box” which is really the starting point for the transformation. You should join our Finance Business Partner Forum which is part of the Business Partnering Institute's online community where we will continue to discuss this topic and you can click here to follow him on Twitter.

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Anders Liu-Lindberg is the Head of Global Finance Program Management Office at Maersk and has more than 10 years of experience working with Finance at Maersk both in Denmark and abroad. Anders is also the co-founder of the Business Partnering Institute and owner of the largest group dedicated to Finance Business Partnering on LinkedIn with close to 5,000 members. My main goal at Maersk is to create a world-class finance function not least when it comes to Business Partnering. I am the co-author of the book “Skab V?rdi Som Finansiel Forretningspartner” and a long-time Finance Blogger with 20.000+ followers.