Posts Tagged ‘sales strategy’

Sales: Process or Art?

ManOboe Partners is admittedly a quantitatively and analytically driven consultancy, with our recommendations focused on making strategic changes that leverage rigorous analysis and information. We attempt to change our client’s internal behavior and external perception by helping create a more intelligent organization. We have also primarily worked with sales organizations, many who are looking to become more disciplined in their approach to their clients.

This has always been an interesting intersection since traditionally sales has been considered more of an art than a science. Writers like Dale Carnegie, Zig Ziglar, and Og Mandino, whose books are about building relationships, understanding customer needs, and the art of persuasion, are held with reverent regard by many in sales. We were recently debating this and we challenged ourselves a bit. Are we missing anything significant in our quantitative approach to rethinking sales organizations? Worse, is our methodology possibly harming the delicate juju found in top sales teams?

We feel that our approach is unique in the industry because we are taking into consideration not only the tangible impact of a data driven organization, but we also incorporate strategies that help foster intangible sales assets as well. Our mantra from our beginning has been that creativity is our top virtue and that collaboration is a critical element in organizational strategy.

A recent article in the Harvard Business Review called Dismantling the Sales Machine validated our approach. The authors argue that a certain process-driven discipline has dominated current sales management thinking, based on scorecards and activity metrics intended to ensure compliance to an “established optimal behavior”. They state that sales managers can gain significant advantages by shifting emphasis towards “judgement of individual reps” and manager’s focus on “providing guidance and support rather than inspection and direction”. We agree. We feel that managers create outperforming teams by nurturing creativity and collaboration, which can be achieved by defining very clear strategies and goals, then using information and productivity tools to make client teams more effective. Managers should think of data and analytics as ammunition that can direct teams to perform in a more coordinated and intelligent way.

We feel that oversight metrics, while they can provide certain “fear” motivators, have the potential of harming a sales team in the long run.

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What Does It Mean to ‘Collaborate’ in an Organization?

WalkWe have been having a lot of discussions recently about the definition of collaboration. For most of our clients, increasing collaboration is one of their ultimate goals. But what does it mean to increase collaboration? At first thought, it would seem obvious what it is: increasing the amount of communication exchange among team members in order to identify new opportunities to increase business. The natural next step that sprouts from this conclusion is to invest in technology solutions that allow for an exchange of information: CRM, instant messaging, collaboration sites like Sharepoint.

These tools facilitate collaboration, but they don’t in and of themselves create or inspire collaboration. Collaboration is at its core a cultural phenomenon. Collaboration springs from the development of a community that has shared interests and common goals, and clear visibility of the path to take to reach those goals.[more…] Organizations need to develop a culture where everyone buys into the idea that sharing information benefits the greater good of the firm. Leadership sets the cultural agenda, by creating principles and providing guidance on expected behaviors.

At this point in the conversation is when we start to lose our more systematic-minded peers, who object to the abstract direction of the discussion. In their view, people by nature want to collaborate but there are systemic barriers that prevent the free exchange of information. They feel that these barriers can be broken down with the use of technology. They state examples of how new media has expanded the ability to share information which, in the cases of Wikipedia and Twitter for example, are being done with little financial incentive. It’s human nature to share.[more…]

It’s important to try to balance the two dimensions; they work in tandem. You can have an organization where everyone buys into the benefits of sharing information, but without the tools that enable a free, relevant, and targeted exchange, people will easily give up. In firms with the right culture but the wrong systems, people will want to collaborate, they can’t, and they will feel guilty about it everyday. Alternately, you can have an organization that spends millions of dollars on any variety of tools to talk to each other, but no cultural transformation to buy into a broader benefit, then the investment is completely wasted. Worst of all, these are usually recurring costs.

The leadership of any organization needs to understand how interrelated these are and have a coordinated plan to address them. In the simplest terms, they represent the ‘why’ and ‘how’ of collaboration.

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Should You Cull Your Account Base?

PaintingWe’ve written in the past about how the key to success and sustainability is ensuring that your account base is profitable, and having robust client profitability metrics are critical to achieving that goal. It’s easy to say this, but much harder to implement because the implication of this analysis is something that most managers and salespeople find completely unintuitive: cutting clients off from doing business with you.

Years have been spent developing these relationships and these clients are paying hard dollars for your service, so why is it rational to turn that spigot off because some financial model is telling you that the account isn’t a good one. Instinctively sales managers start challenging the results of the profitability analysis, putting into question the assumptions that were used in cost allocations or other methodologies. Salespeople are usually closer to their clients than they are to the finance guys or consultants that put the analysis together, so they will be reluctant to bring up these issues with clients. Inaction often results.

So comes the question: should your organization force a culling of the account base? The answer is ‘yes’, but it has to be done in a disciplined fashion that ensures three things:

1) Accounts that are growing, but have not reached a level of acceptable profitability, are ring-fenced and provided a chance to prove their potential

2) Accounts that are going through temporary difficulties are given fair consideration and an opportunity to reestablish themselves

3) Open communication: The shut-off process should not be a simple discrete event, rather it’s a communication process over several periods where the salesperson and sales management learn about the client’s position, condition, and intent. They also communicate the firm’s new client strategy and economic realities.

The discovery process to either categorize the account or initiate frank discussion with a trouble account often leads to better understanding of clients over all and increase in business over time. In other cases, it leads to civil, less painful cease of business that may resume at some point in the future. These outcomes are much better than the alternative of bitter former clients who can negatively impact your reputation.

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Top 5 Strategic Priorities for Capital Markets Sales in 2013

Park_modAs the New Year commences, we outline our top 5 strategic priorities that we see Capital Markets Sales organizations focusing on this year:

1)  Client strategy becoming the top priority across Capital Markets

As banks and brokers begin to grasp the impact of Dodd-Frank on their trading books and profits, the importance of a well-articulated client strategy will crystalize. Sales organizations will be tasked with driving increases in revenues (or closing of revenue gaps created by regulation), which will be highly dependent on their ability to service clients most effectively, best predict client’s needs, and efficiently allocate resources and talent to satisfy client demands.[more…]


2)  Focus on wallet share and profitability rather than production

Top-line revenue has been the most important metric to measure importance and progress with a given account. This year we will see a large shift in focus by all major players on the capture of wallet share and maximization of account profitability rather than top-line contribution. This shift is intended to focus firm resources on the biggest bang for the buck. Divisional performance and individual compensation will be driven by these new metrics. We will see large investment in technology to better measure and report on these numbers. Firms not adopting these measurements will see a loss in share and profits across the board.


3)  Finding opportunity in the long tail

Competition for wallet share of the largest clients will increase even more than in the past as most players become smarter on how they deal with them. We see a refocus on the opportunity found within the “middle market” tail of mid-sized and small accounts. Many of these accounts are actually very profitable to service and are poised to grow as the dynamics of the buy-side industry change. Banks and brokers that can figure this segment out will benefit with increased profitability and better prospects for future growth.


4)  Increased focus on cross-selling across asset classes

Firms with multi-asset class capabilities will try to realize the benefits of a well-structured cross-selling effort. Buy-side firms are looking to gather alpha in any place they can, and sell-side firms have the intellectual capital and resources to provide that but are often too unwieldy and siloed to give any significant advantage or direction to their clients. With the right incentive structure and systems in place, a salesperson on any given desk should be able to give valuable direction that can translate into incremental revenue and share across the platform. We will also see mid-sized banks and brokerages attempt to develop capabilities in new asset classes, and then try to increase overall penetration with clients. There should be enough talent on the Street from recent staff reductions at large banks to build up these capabilities.


5)  Industry partnerships in complementary areas

Given the uncertainties in banking industry globally, there is little appetite for significant merger or acquisition activity. This leaves the option for opportunistic partnerships in markets that can be mutually beneficial to certain players. A firm with strong capabilities in emerging markets, but lacks penetration in the US can partner with US centric firm to provide clients a more complete offering. We’ll see an increase in joint ventures across the board this year.

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Disparity in Technology Investment between Sales and Trading

HighTechnology budgets at Institutional Broker-Dealers have in general been disproportionately focused on the trading side of the business, leaving the sales side with limited technology innovation. This is not to say that much of the technology built doesn’t benefit salespeople. Much of it facilitate the sales workflow, especially when dealing with order tracking, capital, and market data. What has been missing is a meaningful investment in tools that do three things: 1) provide more (and more relevant) client information to salespeople in a consolidated and timely manner; 2) analytic solutions that serve up algorithmically driven insights that can help salespeople better engage clients and provide differentiated service; 3) new ways for salespeople to interact with information and systems, like alerts and mobile solutions.

Consolidated Client Information

Client information at most banks is comprised usually of core client data (addresses, key contacts), internal control data, trade and production data, plus any client interaction data (meetings, calls) that the firm happens to captures. For the later, some firms are disciplined at capturing every interaction, but most only capture parts. There is, however, a great amount of information that can be very useful for salespeople in their dealings with clients. Many salespeople actually spend a significant amount of their time digging through varied internal systems, Bloomberg, Reuters, and the web to find pieces of relevant data that they can use, much of which could be served up in a more consolidated and automated fashion, commingled with basic client information. When looking at a client in their client system or CRM, they could also have client fund holdings and performance data, trends in names or sectors clients are interested in, research readership, and social media data (such as Twitter feeds). For organizations offering multiple asset classes, providing a salesperson relevant activity data from other asset classes can be invaluable, such as providing Equity salespeople data on a client’s corporate bond trading activity.

Analytic Solutions

Sales & Trading organizations have been investing hundreds of millions of dollars in algorithmic analytic and trading technologies. Some of that discipline (and investment capital) should be leveraged to provide more timely and automated insights to salespeople. Specific types of movements in securities or sectors that might interest specific clients, movements in other areas that might be correlated to client interests, and general behavior of different client segments of which a particular salesperson’s clients might fall into. This would give salespeople lot of processed information that provides differentiated insights to offer clients or help better manage a book of clients.

New Ways to Interact with Client Information

A good institutional salesperson in any asset class is skilled at collecting and synthesizing information quickly, either to provide relevant information to their clients or to help them strategically manage their client coverage. Creating efficient ways of getting pertinent information quickly is the key to success. Development of intelligent alerts is one way to serve up relevant activity, analysis and trends. They can simply be an alert that someone else in another product group called on that same client. The more robust the analytical solutions (from point 2) that are in place, the smarter and more relevant the alerts could be, such as a spike in trading for given client segments after a particular event or research published. With current mobile technology, these types of alerts and analysis can be delivered and actioned upon very quickly.

There is a big opportunity for Sales & Trading organizations to greatly differentiate themselves if the right level of investment is made on the Sales side of the organization. This is going to become more critical as innovation in trading technology becomes less and less differentiated across competitors and new regulations constrains the way trading revenue is achieved.

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Five Critical Success Factors for Managers Considering a CRM System

Implementations of CRM, or Customer Relationship Management, systems are notorious for failing to achieve their promise. If you’re considering either implementing your CRM system or upgrading your existing CRM system, here are some guidelines to follow to make sure that you have the most successful implementation.

– Front-line participation: There should be significant participation from front-line business managers from the very start of the project. The most successful CRM implementation that I’ve seen actually had full project leadership coming from front office management, with IT working as subject matter experts and project managers. This isn’t saying that IT managers wouldn’t have the right project leadership skills. CRM systems are probably some of the most idiosyncratic and nuanced technologies that require constant input from a very reluctant user base: salespeople. To get the right requirements that will ensure adoption, there has to be a perception that ownership is within the business, not in IT.[more…]

Culture of information sharing: The right culture of information sharing needs to be in place (within compliance guidelines of course). This is much easier said than done, and for many organizations not very practical. But in organizations where management realizes that bringing together disparate pieces of client information held by salespeople can reveal new opportunities, an effort to change the culture is the best strategy. I’ll detail examples of this in a future post.

Usability: “Usability” is a term used by IT professionals that is often not tangible to non-tech types. In my view, there are two aspects of usability which apply to CRM. The first is intuitiveness, which should be measured by the amount of training needed to get to full use. Less training equals more intuitiveness. The second is workflow integration, which means how well the tools can be integrated into the existing workflow of the user, e.g., adding content to a client record (meeting notes, emails, documents) by simple clicks in email. This area requires the most creativity and expertise to get right. As web and mobile applications become more sophisticated, the expectations of users also increase at a rapid pace.

Data accuracy/integrity: All data-driven systems are only as good as the data within them. CRM data can get corrupted remarkably fast because the source of its key data are from the users, not from a central source. This is a key difference versus other kinds of systems. A lot of thought, and a great deal of expertise, need to be put to bear around this question to achieve a success.

Information integration: I’ve found that CRM information, as useful as it can be to understand a client, when integrated with other systems and data produces incredible insights. Integrating, for instance stock interest information garnered by the sales team with stock and fund performance information can create an interesting product profile that can be actionable. Thinking about how you will maximize the use of your CRM information at the planning stages of implementation creates intense value down the road. Three big questions emerge that change how the system is built and used:

  1. What creative ways can we organize and analyze the data to provide new insights? Your organization probably already captures enough client information to create a competitive advantage, but is not leveraging today.
  2. What sources of information can we find that, when combined with CRM information, provide unique insights?
  3. What other information should client-facing personnel ask for from clients to match with other data sources?
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Can Institutional Equity Sales Be Transformed?

Institutional Equity Sales had been going through an existential crisis since 2003, starting around the time of the Eliot Spitzer rulings. The once noble profession became tainted with suspicions of fraud and conspiracy.  Since then the role has been systematically attacked from several fronts:

– a precipitous drop in commission rates paid by clients leading to drop in margins (and ultimately compensation)

– significant cynicism around the research product they are tasked to sell

– financial crisis at the banks that employ them, which has also led to…

– …instability and irrationality in the markets, making it difficult to provide rational, money-making advice to clients

– drop in the aggregate number of new deals coming to market, which is where a strong distribution platform proves its value [more…]

Within some banks, there have been discussions on whether to exit this area all together, if not strategically pull-back from non-core markets. Salespeople sitting in those seats are nervous, which is not unreasonable given the long-term prospects of the role. Language coming from the executive floors speak of drastic cuts across all Sales & Trading floors, with an emphasis on producers who can’t be easily aligned to a certain threshold of revenue. This is especially concerning to Equity Sales since the commission their clients pay is a bundled payment covering a whole host of services that make it difficult to isolate their contribution.

So is there long-term value in the Equity sales model? I would argue yes, but for the model to have long-term viability, organizations need to think differently about that role and how it can add additional value to clients. They also need to change some key business processes to enhance the impact that salespeople provide across the platform.

Better capture of client interactions

If salespeople had better information about all the interactions that their clients have had across their business and across time, they would be able to create a much more productive relationship. In speaking with many buy-side professionals, it’s clear that one of their top criticisms is lack of continuity and consistency from their counterparties. Through a robust CRM platform that features easy capture of client interactions, capture of research consumption data, and to easily log in notes, the coverage team will easily see client behavior over time and spot opportunities to better the relationship.

There are many CRM vendors in the market and for most people finding the right solution can be overwhelming. When first investigating the options, one is faced with endless possibilities, but also boundless risk. From a quick survey, there are at least 25 enterprise-ready vendors, with about as many upstarts to choose from. Also, CRM implementation projects have a horrid reputation of easily failing. In capital markets businesses, the risk is even higher because of the specialized workflow, compliance, and end-user data needs. Picking the right solution is critical, which I’ll be covered on a future posting.

Institutional Equity salespeople are probably the best positioned to take advantage of these systems and the data that they capture. They have been an integral part of their jobs and most salespeople have faced the challenges of sub-optimal systems.

Integrate with other client activity and client relevant information

IT spending at most broker-dealers has been historically concentrated on the development and optimization of trading technology in order to increase trading profits, to the detriment of the sales side of the business. With the 2008 financial crisis and subsequent reorientation to the client, there has been some shift of investment to Sales IT. There is now a desire to integrate other information into a client profile in order to have a more holistic view of the account to salespeople, including security holdings, fund performance, transaction trends from other asset classes (FX for instance), and client interest-driven information such as stock trends and twitter feeds. The more information that can be integrated into a client’s profile, the better the salesperson can provide guidance to the client. This can be a big differentiator.

The mechanics of integrating this information and rendering it in a useful fashion to salespeople is a complicated proposition, one which falls under the umbrella of the newest management buzz-term “Big Data”. There is a tendency by sales managers to avoid this complexity, but the advantage that we have today is that the cost of gaining a competitively advantageous insight though data has fallen dramatically. Although more discussion on specific strategies and considerations will be addressed in another post, it’s worth taking some time to look at applications like Qlikview, Tableau, and Spotfire to get a flavor of what they can easily do with data. Institutional Salespeople serving as the pivot point of all this information could make them immensely valuable. Of all the people in this role that I’ve spoken to, the one key complaint they all have is that they feel they are constantly chasing information from multiple sources and that they miss a lot of information that can make them more successful. This can be efficiently delivered to them so that they can spend more time with their clients.

Position this role as relationship manager for key accounts, even beyond Equities

The Institutional Equity Sales role is unique relative to other roles in Sales & Trading in that their responsibility goes way beyond executing transactions. Salaried salespeople at many large firms have little involvement with client trades at all. Their core competency is in providing access and insights from across their platforms. Their role and responsibilities should be expanded to provide insight and access across all asset classes. They should be at the center of many of the relationships, especially with clients who are not product specialized, such as macro and event-driven hedge funds.

Buy-side clients constantly say that they want to have salespeople who “think like portfolio managers”.  Institutional Equity Salespeople are the best positioned of anyone in Sales & Trading organizations to evolve into broader experts that can provide clients with innovative solutions. The key is to make sure to provide them with the best tools and information so they can execute the broader mandate.

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