Mediocre Performance by a Majority of Sales Representatives Cost Companies 3.2 Percent in Potential Revenue, Accenture Research Shows

Mediocre Performance by a Majority of Sales Representatives Cost Companies 3.2 Percent in Potential Revenue, Accenture Research Shows

Mediocre Performance by a Majority of Sales Representatives Cost Companies 3.2 Percent in Potential Revenue, Accenture Research Shows

The FINANCIAL -- NEW YORK -- The vast majority of corporate sales representatives are consistently average performers but could boost the competitiveness of companies by generating hundreds of millions of dollars in additional revenue each year for those businesses able to lift their performance even modestly, according to new research from Accenture and CSO Insights. Today, mediocre performance is costing companies 3.2 percent in potential revenue, but that could be secured through a five percent improvement in sales performance enabled by a combination of enhanced training, technology-enabled sales tools and better use of data and analytics.

The Accenture report, Powering Profitable Sales Growth - Five Imperatives, examined the sales competitiveness of a sample of companies with revenues of more than $1 billion from CSO Insights’ 2014 Sales Performance Optimization Benchmark Study. Past research from CSO Insights has shown that the top fifth of sales reps generate more than 60 percent of a company’s sales revenues, while the remaining four fifths, including the 65-70 percent of average performers – the so called “frozen middle” – drive just 40 percent of sales. By enabling these average performers to emulate the best practices of high-performing sales reps, companies can improve competitiveness by driving higher quality customer interactions and more profitable sales.

“Companies over-index their search for improved performance when focusing on the best and worst performers in their sales force, but this study illustrates the significant rewards of tackling a culture of averageness,” said Robert Wollan, global managing director, Accenture Strategy, Sales & Customer Services. “We estimate that a $10 billion company with approximately 750 sales professionals can increase revenue by $320 million – a significant return on a relatively modest investment. The revenue opportunity from this crucial component of competitiveness is especially important given that our research tells us that many CSOs, business unit sales leaders, and other sales executives are struggling to meet their revenue targets for the coming year.”

The Accenture and CSO Insights study highlighted the challenging sales environment facing many sales forces. While almost three-quarters of companies (72 percent) are raising their revenue target by 5 percent or more in the coming year, only 14 percent of chief sales officers (CSOs) are very confident that they can achieve increased revenue goals. Just 59 percent of sales representatives are expected to achieve his/her quota in 2014, down from 67 percent in 2013, according to Accenture. 

Among the most important challenges hindering sales performance are limited differentiation, a lack of common sales processes, lower adoption of sales processes and lengthy sales cycles. The study points to practices that could be contributing to these difficulties. Only 51 percent of surveyed sales organizations use a formal step-by-step selling process that guides sales professionals through a variety of sales interactions. Just 8 percent of companies have a formal sales methodology or procedure in place – the lowest level in three years. Troublingly, sales representatives are spending just over one-third (34 percent) of their time selling, down from 41 percent in 2011.

The study also indicated that sales forces are limiting their competitiveness by underutilizing or misusing digital and mobile technologies. Adoption of tablet devices by sales representatives has increased by 400 percent in the past year, but their use is often limited to checking e-mail and conducting administrative tasks, rather than leveraging them to fulfill strategic business needs. Similarly, only 30 percent of companies are using analytics and, of those, less than one-quarter is using data to identify opportunities to cross-sell (23 percent) or reduce customer churn (13 percent).

“The combination of mobility, the cloud, sales analytics and cutting-edge content management has created a new opportunity to enhance the performance of the average sales performer,” said Wollan. “This opportunity is being missed, and companies need to improve their focus on the right combination of these resources to help improve competitiveness and deliver higher sales and margins.”