Editor’s Note: This article is reprinted with permission from longtime industry consultant George M. Keen of Wise Wolf Consulting. What follows is Chapter 7 of his 250-page book, Sales Management in an Equipment Dealership. The book is available to Farm Equipment readers at a discounted rate a https://tinyurl.com/39s5mxzz.

This article is the first in a new multi-part series — Performance-Driven Dealerships — featuring Keen’s content curated at www.Farm-Equipment.com/Keen

To put it simply, the sales manager is responsible for only 3 things: the sales activity, the quality of the sales calls and the allocation of the effort. Your choice of allocating these resources for maximum exposure and results is one of the primary responsibilities as the sales manager.

When you’ve achieved optimal sales activity, ensuring the highest possible quality and strategically allocated resources for optimal coverage and impact, you set the stage for significant positive transformation within your department, your company and your market.

The Change Process

Management’s job is sometimes so obvious many people don’t see what it is. Simply put, it is to “change behavior.”

Upon a closer examination of managerial expectations, it becomes evident that managers are responsible for influencing their employees’ behavior. This influence aims to foster increased sales, heightened productivity and a positive attitude. Managers are also tasked with steering customers’ behavior toward increased purchases and increased satisfaction with the solutions offered by the company. One might even contemplate the role of managers in influencing the behavior of suppliers or vendors, aligning with the notion we just discussed regarding the transformative power of managerial behavior.

Successful change doesn’t happen accidentally nor without help. It takes work and effort, focus and planning. Many business books have been written on this issue, but it comes down to 5 simple points:

• Executive Commitment
• Vision/Design
• Training, Knowledge & Skills
• Management/Reports
• Feedback Analysis

Establishing Sales Expectations

All salespeople sell better as they get more experience, right? Maybe not ...

Table 1 ranks salespeople with actual data across various industries — ag, construction, lift truck and tires — according to the gross profit (GP) they delivered to the dealership. The sales volume, pricing and gross profit in each industry are different, but this table ranks salespeople who brought the top 40% of the GP as “A Salespeople,” those who brought the next 30% were “B Salespeople,” the next 20% delivered are the “C Salespeople” and the last 10% of GP was the “D Salespeople.”

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With real information from each of these industries, you’ll see the number of years of experience is not widely different in each category of salespeople’s rankings. The GP percentage may also go up or down from one group to the other within an industry, but the real difference is how much GP in dollars that the salespeople in that segment deliver. Considering the impact of salaries, medical coverage and commission, you can see how this data applies to the dealership.

One of the most critical determinants of salespeople’s productivity is the total dollars of GP each delivers. Of course, your job as a sales manager is to hold them to this volume of GP and maintain the quality of sales calls and the quality of the GP margin.

A key point of Table 1 is that the larger volume of profit is generated by a small percentage of salespeople.

It should be noted that when evaluating salespeople, adjustments should be made if the salesperson is selling 25 horsepower garden tractors vs. large horsepower row-crop tractors. There are some obvious GP dollar changes to take into consideration.

Productivity

You must analyze productivity to ensure that your sales department meets the expectations defined in the Wise Wolf Consulting (WWC) Financial Model and, specifically, in the sales department model. This analysis helps you identify how your department is performing in relation to goals and how to improve that performance.

There are 2 basic methods of analyzing productivity, each with its own measure:

• Departmental — Measured by the market share your company is capturing in its market area.
• Individual — Measured by the GP contribution per salesperson.

Departmental Productivity

Analyzing your participation and closure rates in your market area would be best to meet your market share expectations. By examining and measuring participation and closure, you can identify possible methods of achieving the benchmark defined in the WWC Financial Model.

Benchmark = XX% Market Share

Participation

Participation measures how well your salespeople are blanketing your market area. Your participation figure indicates the percentage of the available business you compete on.

Are you calling on and competing for 50% of the available business in the market area? Or are you competing for 90%?

Because each purchase’s unit sales volume may differ, the participation percentage must be based on dollars of equipment sold, not on the number of sales agreements. Therefore, the participation figure is a weighted number based on dollars.

To calculate participation, you must know how many dollars or units of new and used equipment in your market area are purchased yearly. Your participation is the percentage of those dollars for which you competed.

Closure Rates

Closure is a measure of your success in selling to fleets. It analyzes how effectively and successfully your salespeople present your “package of value” (POV). Closure is the percentage of orders received, divided by the quotations made.

To determine the closure rate, you must keep a log of quotations and update the log so you can determine which quotations are converted to sales.

Orders  Quotations = Closure Rate

Market Share

You get market share if you multiply your participation rate times your closure rate.

Participation Rate x Closure Rate = Market Share

Suppose your salespeople are calling on and competing for 80% of the business in the market (participation) and selling 60% of the business they compete on (closure). In that case, your market share is 48%, as shown in Table 2.

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You must have participation and closure because you want to increase your market share. The analysis of participation and closure helps you analyze opportunities for improvement.

If your participation rate is low, you must determine how to help your salespeople present to more fleets. If your participation rate is high but your closure rate is low, you must help your salespeople sell more effectively.

Individual Productivity

Whether your departmental productivity is on target or not, you still must analyze productivity individually. An individual analysis helps identify personal opportunities for individuals on your sales team to make improvements.

To measure individual productivity, you must calculate the gross profit (GP) contribution of each sales team member. Then, compare the amount of each GP contribution to the individual’s quota/sales goal.

When determining an individual’s quota, consider that salesperson’s experience and history and the benchmark defined in the WWC Financial Model.

Benchmark = $240,000 GP Per Salesperson

This financial benchmark is calculated as a department average. Therefore, it is possible to have some salespeople with a GP contribution higher than $240,000 and others with a GP contribution lower than $240,000 yet still achieve the benchmark. It would help, however, if you strive to create a sales team in which every member meets or surpasses this benchmark.

Organizing Territories, Assignments & Teams

There is an art to strategic sales resource allocation. Imagine yourself as a conductor leading an orchestra.

Your instruments are your salespeople, and your score is your sales strategy. Each salesperson possesses unique strengths and talents; your task is to orchestrate their efforts for maximum impact. This requires a deep understanding of resource allocation — a critical skill for any sales manager

Table 3 looks at how many calls we expect can be accomplished in the year, then allocating them by segment or size of accounts for more frequent to large or complex accounts as well as less frequent to smaller accounts. 

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Remember, if the larger accounts have more units and more opportunities to sell more units, they deliver more money in sales and GP dollars. So, we are expecting the salespeople to spend more time there. We might even look at Table 3 and ask why we would spend 100 calls on the small accounts if they could be covered in another way, such as flyers, brochures or outbound calls.

Your salespeople are your most valuable resource, and their time is their most valuable asset. Just as a service technician’s productivity is measured by their hourly output, a salesperson’s success often hinges on the number of calls they can make. While the number of calls varies across industries, understanding this metric is crucial for effective resource allocation.

Not all accounts are created equal. Some, like the “A Accounts,” represent a significant portion of your business and require more frequent contact. Again, others, like the “D Accounts,” may be better served by alternative methods like flyers or outbound calls. The key lies in segmenting your accounts based on size, profitability and potential value and allocating calls accordingly. 

Don’t forget to bring prospects and customer accounts to each salesperson’s total accounts. You might balance the accounts 33% prospects and 66% customers, or 50% customer and 50% prospects; it will depend on your sales strategy for the salespeople and what your company needs.

Table 3 shows what would happen to a salesperson with 500 assigned accounts. If the chart shows what they can accomplish with balanced coverage based on the size of the accounts, at least 300 accounts in that 500 would not be covered, called on or approached in the next year. Why waste your breath complaining to the salesperson about what they “are not accomplishing” when, according to the chart, they could not cover the entire list..

Territory vs. Account Assignment

Nothing is wrong with having geographic “territories.” The point is that “territories” generally indicate a style and philosophy that says sales managers have “abdicated,” “delegated” or “abandoned” the function of determining who and how salespeople will organize, structure and work their group of accounts. 

The term “account assignment” means we are talking about a group of specific accounts (by name) that are assigned to a salesperson, and the salesperson is “responsible and accountable” for demonstrating results. Sometimes, the salesperson has a territory like that of Territory A in Fig. 1. What’s lacking is any real plan to it. There is no expectation of results and coverage. When the salesperson achieves the sales goal, is it because they worked all the accounts or just part of them? Are they getting as much out of the accounts as possible? What is the potential?

Fig. 1. This illustration shows the geographical territory vs. account-based model.

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What is different about the accounts represented in Territory B of Fig. 1 is that it is known how many of each type of account there are, possibly what the potential business is, and what “accountable” behavior looks like in covering these accounts.

Yes, the first group of accounts in the territory could be organized and “cleaned up,” but our experience is that there is a mindset difference. In the first, the salesperson is “entitled” to all the business within the geography. This is not because they call on or work these accounts but because they are “entitled” to what comes out of the geography because that is what they were given, charged with or held accountable for from the beginning.

In Territory B, the salesperson was given a list of accounts with names and addresses. It did not matter if these accounts were geographically organized; they were a list of accounts on a set of pages, and that is what they were given, charged with or held accountable. The mindset is different.

When a prospect with the same county or zip code calls and wants to buy your product, they don’t immediately expect the commission. Why should they receive a commission if they didn’t call on the account or find them? And if they are calling on the accounts assigned to them, how did they “find” this account? The logic is obvious.

This is not impossible; it just requires someone to make real decisions, watch the results and adjust to the future as things progress.

A Team Approach to Account Coverage

Mature account management frequently involves more than one salesperson on key accounts. Consider your absolute, No. 1 customer. Are you comfortable leaving your business relationship with that account in the hands of a single salesperson? What happens if that salesperson leaves, goes to the competition or goes to work for that large customer?

If you have high Priority “A” Level accounts, you might seriously consider having a team involved with those accounts. Consider a multi-frequency schedule of salespeople and managers’ involvement. A team schedule approach might be:e

• Dealer-Principal – twice a year
• Senior Management – quarterly
• Equipment salesperson – twice a month
• Aftermarket salesperson – twice a month

Initially, some might say that degree of coverage is too much for one account. But if that account is 2-5% of your total business, can you afford not to be present in their business that often?

Attacking Conquest Accounts

Table 4 highlights the inclusion of conquest (or color conversion) accounts, representing prospects with high potential for conversion into valuable customers for your dealership. Account management extends beyond merely managing existing customers; it encompasses the strategic cultivation of prospects.

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Dedicating time and effort to nurturing these relationships is crucial for expanding your customer base and achieving sustainable growth. Ignoring conquest accounts essentially forfeits the opportunity to acquire their business and unlock their potential value.

Table 4 illustrates what you might do to organize your sales efforts to include a blend of customers and prospects. 

Visit www.Farm-Equipment.com/Keen for the rest of the series, along with the downloadable content, “What Your Salespeople Need: A Skills Set Checklist.”