Getting started with Sales Force Automation
In the past I had the opportunity to work as an intern with a Consumer Packaged Goods (CPG) company in India and I wanted to share some of the experiences that we had in implementing the Pilot Program of a handheld for the sales reps. To understand the objectives and the implementation approach of the Sales Force Automation (SFA) Program, it is important to provide a brief context of the CPG market in India:
- High volumes: Regular consumption by a vast number of consumers leads to high volume of sales.
- Low value: Consumer Products inexpensive thereby Carrying Costs are low. However the costs of stock-outs are high as large sums of money are spent in Advertising and Promotions to generate sufficient interest amongst the potential consumers.
- Plethora of Stock Keeping Units (SKU). Each product comes in different sizes, shapes and flavors hence leading to a large number of SKUs.
- Market dominated by Traditional retail formats. Traditional retail formats rely on the instincts of the owner-manager rather than elaborate business strategies. Hence the number of SKUs and the quantity that is purchased is based on their quick assessment of what it will cost, how much they can sell, how much they can profit in the shortest time. Therefore the relationship that the sales rep enjoys with the retailer supported by current promotions can swing the assessment of the retailers in their favor.
Given the above characteristics, the sales reps need to ensure that the retailers buy and stock enough to prevent a stock out situation. Secondly, the sales rep has about 40 different SKUs to sell, but those that actually get sold are the ones that are being heavily promoted or vastly popular. The ones that belong to neither category have very little sales to show because they get the attention of neither party.
Therefore at a very basic level, the SFA program's objectives were:
- Ensuring more than adequate stocking to prevent stock outs. The handheld based on previously entered information, would prompt ideal stocking level given the retailer's size for the SKU. This data would help the sales rep in making an extra effort to try and sell more.
- Focus on lagging SKUs. The handheld would throw up a list of SKUs that were not purchased by the particular retailer in the last few weeks. However to protect the sales of the high volume SKUs, the sales reps were to casually bring up "oh by the way, would you like to buy this, this and this SKU....we have a special promotion going on".
At an operational level, the tool had to be easy to use, requiring minimal punching, long battery life, minimal maintenance and rugged enough to withstand the heat and dust.
As expected, it was not the Technology but the sales reps that posed the biggest challenge in implementing the program. The sales reps had built a good relationship with their retailers and their sale depended on it (relationship). They felt that they would be jeopardizing the relationship if they were seen using Technology rather than their established rapport in their sales.
Some of the reactions from the sales reps were:
"How can the handheld tell me anymore about my customers than what I already know?"
"This tool was designed in the confines of the head quarters and has no practical relevance in the field. The attention span of the retailer is very short and we have no time to punch figures into it and let the retailer get distracted with other things"."In our attempt to sell the lagging SKUs, we are jeopardizing the bread and butter business of the company".
All their concerns were valid, but so were the intentions of the Program. Before the program there was very little scientific data on the retailers and their buying patterns. Without this data, it was impossible to measure the effectiveness of the Trade Promotions at a granular level. Secondly, innovations in technology had opened up the possibility of having devices that could communicate order information to the Supply Chain on a near real time basis, thereby offering huge cost savings. Such enhanced versions could only be introduced when the basic handheld program stabilized. Lastly, the sales reps themselves stood to benefit through increased sales leading to increased bonuses for them.
Therefore, despite the initial resistance, the company decided to go ahead with the program. About 10-20 sales reps working in Bangalore were chosen for a Pilot Program for a duration of 3 months. They were invited to a Training Program that focused on the Program objectives, tangible benefits to the Company and the sales reps and hands on training sessions. A team comprising of Marketing and IT resources continuously monitored the usage, frequently occurring issues and the sales.
During the Pilot phase, the sales of lagging SKUs showed marginal improvements and hence fears of decreased sales were alleviated. Also with usage, the sales reps began to feel more comfortable with the handheld. These were positive indicators for the company to proceed with the sales force automation program.
Following were the key takeaways from my stint:
- Pilot Programs offer invaluable field experience
It is where the rubber meets the road that the hypotheses which went into the design of the program are tested in the actual marketplace. - Change needs to be staggered. Bigger the change, more the staggering.
Big changes need more hand holding, more attention and hence need to be rolled out in phases. Phased rollouts allow the company to rewire the program based on past experience before rolling out to the subsequent phases. - There has to be benefits for all the stakeholders
Had we promoted the benefits to the Sales Reps better rather than just the company's objectives, the change process would have been easier. - Adoption of technology could be deferred but not avoided.
Rapid changes in technology have provided companies to provide products and services faster, better and cheaper. However adoption of technology is no longer a differentiating strategy but a survival strategy.
