Following last week’s blog post on sales force management challenges in China, here is an effective strategic framework to help multinational senior executives address key concerns in their sales organizations, along with some tactics that many companies have adopted to drive sales excellence in China.
Role: Decentralize key account management, and adjust customer profitability review to optimize sales resources in China.
Decentralization of sales organization has become an increasingly critical strategy for multinationals in China. The wide geographical coverage and regional market differences in the country have made it difficult to maintain close customer relationships and cater to local client needs, especially with most sales people sitting in Beijing or Shanghai. By restructuring sales territories and allowing sales people to work from home in regional hub cities such as Chengdu and Wuhan, quite a few multinational companies are now able to develop more effective customer segmentation in China, and allow sales managers to invest more resources to serve local clients with differentiated services.
Upgrading key account qualifications and more regularly evaluating customer profitability is also an effective tactic under China’s ever-changing market dynamics. For example, a multinational medical device company has revised its key account criteria in China by emphasizing the importance of both up-sell and cross-sell opportunities. After reducing key account manager load ratios and allowing them to serve as one-stop shops across various product lines for truly valuable customers, the company is able to optimize sales time allocation to drive service excellence and significantly improve profitability.
Skill: Focus on KPI’s most relevant for the Chinese market and create a mentoring culture.
Evaluating local sales people based on a comprehensive yet flexible ranking system is of great importance in China. Some multinationals have started to use behavioral goals in scorecards to drive daily activities and publish the entire team’s sales results with customized optimal ranges based on a salesperson’s experience to ensure continuous progress. For example, a global logistics service provider has identified pipeline strength and up-sell as the two KPI’s that could drive the most improvement in their commercial outcome in the Chinese market. By placing more evaluation weight on these top 20 percent capabilities that will drive 80 percent of sales revenue, they are able to guide sales team members to focus on improving these targeted areas.
Besides developing training programs based on experience levels, driving a mindset shift toward a mentoring culture is another task that multinationals need to work harder on in China; therefore, it is also recommended to include more mentorship-related KPI’s to encourage sales leaders to walk the talk. Some companies have created mentorship achievement tree, which are publicly posted next to sales performance figures, and included coaching metrics as important components of sales scorecards, such as the number of mentees and mentoring score, to foster a mentoring culture in China.
Will: Reward strategic contribution, offer cross-functional bonus and tailor HR benefits for local sales people.
Offering training in business planning, and framing these training programs as a privileged reward, is a powerful tool to incentivize sales reps who have identified new market opportunities in China, as well as to help the organization better capture market insight on the ground. For example, a large technology multinational has initiated the Global Leaders for China Program (GLCP), where high-potential sales reps form groups to work on new business ideas, receive training from internal strategy department colleagues and third-party consulting institutions, and present their business plans to the China leadership team at the end of the program.
Another useful tactic is to offer cross-functional bonus to team members in technical support, marketing, finance and other administration roles, which will create a more collaborative environment and ensure the quality of functional support for the sales team in China. A few multinational companies have also tailored training programs and HR benefits for the Chinese market to effectively account for experience levels and generational differences.