Commercial & Industrial Case Study

Achieve Long-Term Sales Growth Through Detailed Design

Introduction

Facing Slowing Demand and Growth After Pandemic Boom

Following two years of revenue growth, a truck rental client set a goal to increase revenue by $1 billion over the next five years. However, the pandemic era’s high-demand environment fueled these recent years of growth and once the markets began normalizing, demand and growth fell short of historical earnings and growth targets. These trends revealed growth was driven by opportunistic selling behavior instead of proactive selling motions among core sellers.

After working with the client’s Business Unit A division on previous engagements, Alexander Group’s positive reputation with company leadership resulted in the client re-engaging with the Alexander Group for detailed sales design for their Business Unit B division.

Approach

Embarking on a Five-Month Detailed Design Initiative

Alexander Group completed a comprehensive evaluation of the client’s Business Unit B go-to-market strategy to identify its strengths and gaps. This evaluation informed a design roadmap to address these gaps, and we entered into a five-month detailed design phase. During the design phase, Alexander Group was tasked with leading all workstreams.

Key Findings

Sellers Were Engaging the Wrong Prospects

Comparing the client’s sellers to Alexander Group benchmarks revealed that Business Unit B sales representatives spent three times the industry average on prospecting activities but only 80% of the time engaged in selling activities. However, sellers who spent more time engaged in selling generated more revenue.

Alexander Group’s analysis also revealed that sellers spent 90% of their time with low- and medium-tier prospects. On average, these prospects only generate $1K in revenue, while high-tier prospects generate an average of $12K, indicating that sales activities weren’t focused on the right customers.

Recommendations & Outcomes

Designing Nine Workstreams to Drive Growth

Alexander Group recommended the deployment of four growth plays across the following detailed design workstreams:

Opportunity, segmentation and account prioritization models

We incorporated account-level opportunity and ranked accounts across multiple lines of business according to the overall value to the client.

Coverage, job design and rules of engagement

We differentiated coverage of accounts based on their value to the business to ensure customer satisfaction and allow for improved retention, expansion and conversion of opportunities. This included developing top-tier hunter roles, dedicated key account managers, paired field account managers for cross-regional accounts, and an inside sales program to cover lower-value opportunities. We aimed to align the sales process with the end-to-end customer buying journey and codify rules of engagement between overlapping roles to drive company-wide continuity. Additionally, updating career path opportunities with additional roles allows for opportunities across lines of business.

Organizational structure

In the client’s current state, the sales organization was separated by line of business. We aimed to centralize the sales organization and change seller reporting lines from branch operations to true first-line sales managers within a centralized organization.

Sizing and slotting

During the pandemic, the client rapidly expanded its headcount. We aimed to resize the organization to correct for over hiring and align with near-term revenue goals. This was achieved by aligning incumbents with new roles based on talent, historical performance and hiring needs.

Territory realignment

Alexander Group worked with the client to realign territories to a new coverage model. In the top tiers, we created balanced territories for seller equity, while in lower tiers, we solved for territory inequity through compensation plans due to profit and loss limitations.

Compensation, cost modeling and quota setting

We recommended transitioning from commission-based to bonus formula plans for sellers in top tiers. For lower-tier sellers, we developed commission tiers based on territory size to solve for territory inequities as a near-term solution. In the longer term, we recommended transitioning lower-tier sellers to bonus formula plans once opportunity modeling is completed.

After completing these workstreams, internal client politics required the Alexander Group to pivot to teaching the client how to independently execute the following aspects of design once the engagement was over:

Following the detailed design and implementation of these workstreams, the Alexander Group anticipates that the client will see revenue growth of 7.5% by the end of the third year. The client also expects to see improvements in customer retention, share-of-wallet growth among existing accounts, capture of new accounts and optimized fleet utilization.

Transforming a Sales Organization for Sustainable Revenue Growth

For organizations looking to drive long-term sales growth in a rapidly changing market, finding the right way to engage and incentivize their sales forces is crucial. Leveraging insights into what top organizations are doing, Alexander Group can help you design compensation plans to motivate your sellers. Contact us today to learn more.

About Alexander Group

Alexander Group understands your revenue growth challenges. Since 1985, we’ve served more than 3,000 companies across the globe. This experience gives us not only a highly sophisticated set of best practices to grow revenue—we also have a rich repository of unique industry data that informs all our recommendations. Aligning product, marketing, operations and finance efforts behind a successful sales organization takes insight and hard work. We help the world’s leading organizations build the right revenue vision, transform their organizations and deliver results.