Getting more bangs for your bucks

This article was stimulated by the Stage One results of a survey carried out in Q1 2004 by The Directors' Centre. The survey asked the question:
"What is the most effective sales method?"

We'll take a look at the results in a moment. But first I want you to consider how your company goes about allocating its 'discretionary marketing spend'. By this I mean those items in the budget that are set aside for promoting the company's products and services, plus activities designed to stimulate growth that are often labelled 'business development'. Essentially we are talking about any money which is targeted at increasing sales – either immediately or in the longer term – over and above 'must have' items like employees' wages, managing the sales channels, associated overheads etc. So just take a moment to identify this type of spend within your own organisation, who has control over it and how it is actually spent.

The reason I ask you to think about this is because in my (unscientific) survey of the IT and communications marketplace, it seems that what is being spent is out of line with what the businesses themselves see as being the most effective use of this money. And this is probably also true in other industries.

Two examples:

A small company in the enterprise telecoms sector prides itself on having large stands at exhibitions, in prominent positions. Over two years it has spent most of its discretionary marketing spend on attending exhibitions and improving the stand, so that now the stand does look really impressive, complete with a rolling video on a flat screen.

Another company that for some years now has had a large channel partner spends a considerable amount of its discretionary marketing spend on product training for the distributor's sales force – but bemoans the fact that three months after running a training course it typically finds that about half the salespeople on the course have left the distributor and gone elsewhere.

In my view, neither company is getting as many 'bangs for its bucks' as it could be.

So, what is the most effective use of this money?

The obvious answer is to allocate the spend in accordance with what you, or your senior management, or your industry believes to be the most effective sales method. Makes sense, doesn't it? If having a large impressive stand at an exhibition is a truly effective sales method – i.e. it directly generates a large proportion of your actual sales revenues – then this is where you should be spending the majority of the money that is targeted at increasing sales. Similarly, if running product training courses for your channel partners' salespeople results in vastly improved sales levels, then this is where most of your discretionary marketing budget should be spent.

Survey results

So now that we have got you thinking along these lines, let's take a look at the results of The Directors' Centre's survey. The survey was targeted at SMEs, but the results are probably transferable to larger companies, taking into account the effect of branding and market presence (i.e. we can expect advertising to play a larger role in generating sales for bigger companies, but otherwise the relative contributions of the other factors are likely to be roughly the same).

247 companies responded to the simple question: "What is your most effective sales method?"

FINDINGS FROM THEDC SURVEY

• Face to Face Selling 43% (of respondents said that this was their single most effective sales method)
• Referral/Recommendation 29%
• Networking 8%
• Advertising 5%
• Telesales 4%
• PR/Publications 4%
• Web/Internet 3%
• Exhibitions/Events 3%
• Direct Mail/Sales Letters 1%
• Email 1%

Robert Craven of The Directors' Centre cautions that this was a very general survey, but notes that the results do concur with findings by other institutions, such as banks etc. The other point to note is that for a few of the companies in the survey (3%), taking part in exhibitions/events is their most effective selling method: but this is no doubt because they are spending so much of their time, effort and money on them.

A significant proportion of the companies that took part in the survey (43%) say that face to face selling is the most effective sales method. So surely, money spent on improving this activity must be money well spent – mustn't it?

Training, or enablement?

According to the results of the survey, 43% of companies should be spending the majority of their discretionary marketing budget on improving the effectiveness of face to face selling. Or, to put it another way, unless you have a specially focused selling strategy, something like 43% of your discretionary marketing spend should be directed at making your salesforce better at selling your products or services. In the context of partnering and channels, this means not only your direct sales, but also making your channel partners' salespeople more effective.

So the second company we referred to above is at least allocating its money in the right area. The trouble is that most companies don't see the difference between training and enablement. Most of their time, effort and money goes on sales training – which is time-consuming, expensive and directed to individuals – rather than on ensuring that the sales channel has the information it needs, in the right format, to enable its salespeople to be effective at face to face selling of your products and services.

Unless you do all your selling via the internet, or through advertising etc, enabling the salesforce is probably the single most effective way of increasing your sales performance. By providing your sales channels with concise, focused sales support material, written in a way that salespeople can empathise with and understand, you are making sure that the knowledge and ability to sell your products and services is established and remains within the channel, no matter how many individual salespeople may come and go. And by improving the effectiveness of face to face selling, you are also spending your money wisely, on an activity that more than 40% of businesses say is their single most effective sales method.

So when you are next involved in budget setting, or deciding how to spend the marketing and business development money, ask yourself the really hard and difficult question: "Are we really getting as many bangs for our bucks as we should be?"

Robert Craven can be contacted as follows:

Robert Craven Tel: +44 1225 851044 Mobile: +44 7721 892 592
The Directors' Centre, 1 The High Street, Woolley, Bath BA1 8AR
http://www.thedc.co.uk

Partnering Points on getting more bangs for your bucks

• Analyse your current discretionary marketing spend. Try to measure how successful this is in terms of directly attributable levels of sales.
• Re-focus some of this spend onto making salespeople more effective, both for direct sales and those in your channel partners' sales teams.
• Recognise that product training is not the only or most effective way to improve the performance of salespeople: you must also provide them with the information they need to sell your products and services.
• The information you provide should be in a format that is accessible to and written specifically for salespeople. Simply dumping your current sales support material on them is unlikely to bring you the results you are looking for.
• Consider bringing in outside help – people who have successfully produced sales support material of this kind, and who are able to crystallise the business benefits of your products and services into key selling messages for your target customers.

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