Increasing Sales Networks Globally - A Data-Driven Approach
Planning Network Growth
Planning business to business sales networks can be a difficult process, and it is made especially challenging when your organisation is trying to grow and build a customer base into multiple new global territories at the same time.
Often companies are growing, and are also trying to rationalise the costs associated with growth, such as sales representatives and costs for brand awareness, advertising, and general marketing. At these times it is especially important to plan and build a clear strategy for growth into new markets. This is a complex issue, and this blog summarises the process of analysis, in terms of preparing information and visualising the data sets.
Often for mature organisations and sales teams, the assignment of distributors, dealers, and sales networks within market areas or territories has evolved over years of company growth, staff changes, and a multitude of external factors, rather than through logical analysis and decision making.
Many organisations lack both the information required to correctly plan where their distributors, dealers or resellers should be and also to assign territories to staff. It is also important to correctly plan the expansion of overseas sales teams to facilitate the appointment and management of new dealers and distributors. In addition to the data required, companies are often missing the most suitable software tool to facilitate this analysis and visualise all of the right data.
The end result is territories where sales networks have not been efficiently planned and also where existing resellers and potential/prospective resellers for goods are not shared equally between the staff resources that are available. This, in turn, reduces your sales, the effectiveness of sales teams, and can act negatively on the experience of your partners, which ultimately has an impact on your brand.
For a company with a national or international client base, in many cases, sales networks or territories have been assigned with defined boundaries, such as counties or state borders, rather than with a data-driven approach.
Sometimes sales leaders plan territories by reviewing internal data for existing clients and prospects (sales turnover as an example) along with the number of effective dealer or distributor “pins” on the map.
Defining sales territories in this way can reduce your sales and market share and also lead to an ineffective use of a sales manager’s time and an uneven distribution of dealers to sales representatives, especially within more densely populated market areas, larger towns and cities, where there may be a greater density of actual and potential sales.
Sales territory management software exists to help organisations to be more efficient in the process of assigning territories and even planning routes and meeting frequency. The most technically aware organisations are now using these tools to incorporate a wide range of data into the planning process, such as customer value and size, customer behaviour and buying trends, demographic data, population density, regional economic data, and discretionary spending.
It’s also possible to overlay key metrics for a given industry sector into these tools so that a leadership team can also take into account multiple data sources at the same time such as industry trends and geographic economic forecasts, and sociodemographic data. This type of data is readily available and is also offered natively within some of the software tools available to organisations. That means companies that adopt this type of software can more rapidly visualise a strategy, assess current networks, and then effectively re-assign new territories based on the right resources.
Putting aside the software visualisation tools for a moment, we must also look at the type of data that an organisation should include in their analysis and planning process when Planning Sales Networks and Assigning Sales Territories and the impact on the end results. Here are some suggestions to follow in terms of a high-level project plan and some of the external data that organisations should consider using:
1. Record and Organise Existing Clients, Leads, and Prospects
Most organisations know where their existing clients are located. However, this is a good time to ensure that ALL of the existing relationships are detailed and have been correctly organised and stored in the same place. In a business world where customer databases, CRM’s and Software Sales Platforms are commonplace many contacts still exist that have not been correctly recorded. this includes contacts who are New prospects, Lead Introducers, in Industry and trade organisations, and at Affiliate Businesses where informal arrangements exist. Processes and culture vary between organisations, but this is a good time to compile all that data into one place and conduct some commercial “house cleaning.”
2. Add sales revenue information by product type/category
A large number of organisations have one system for sales prospecting, another for in-life management of customers, clients of dealerships, and resellers and yet another for the finance team.
If you are going to review and assess your existing network and look at potential changes and new dealer appointments, this is the time to centralise your sales data and information. Ideally ensure that within your core Sales CRM tool, you have current sales information and that the information available is also granular – essential if, like most organisations, you sell multiple types and categories of goods. There are many ways to automate sales reporting between software platforms depending on which CRM or client database your organisation is using.
3. Segment Your Available Market, Research, and Detail ALL Prospects
The next step is to conduct some thorough research into your marketplace and all the potential customers or resellers for your goods. A simple Market Segmentation is advisable first – you can refer to our blog about market segmentation here for detailed recommendations. As this blog is focused on business to business sales, as a broad, headline summary: you will need to know and categorise all of the types of business that DO buy and sell your goods AND all of the types of businesses that COULD buy and sell your goods.
4. Research and collect the most relevant economic and demographic data
As this blog focusses on business to business sales networks, we will look at some of the most common, relevant, and helpful third-party datasets that organisations can use when reassigning sales territories. While some of the data at first review can seem complicated, there are some really logical and important data sets that are available to an organisation and which should be used in conjunction with specific market data “pins” and segmentation to do this work properly. Some examples include:
- Population Density:
Population density is simply the number of people living per unit of area in a given place. It is usually quoted per square Kilometre or square mile. The data is available from a number of official sources regionally and is regularly updated. Whilst Population Density is not a measure of economic activity, for any given marketplace and where products are purchased by the “general” population, one assumption is that where population density is higher, sales of goods can also be higher. Or to simplify further, more people = more sales and accordingly, more retailers, resellers, dealers, and sales representatives will be needed.
When looking to utilise data for a population density, it is also important to decide what boundary data is available, based on the specific marketplace, as this information (on boundaries) will also be needed to visualise any information. Within Europe, as an example, a common and helpful set of boundaries would be NUTS (Nomenclature of Territorial Units for Statistics!) These are determined, regulated, and published by the European Union directly – and more specifically the organisation called Eurostat, which manages and publishes a vast quantity of European Demographic and Statistical Information.
There are of course exceptions, to offer two examples. If your organisation was manufacturing agricultural equipment, unit sales would most probably decrease in areas with higher population density. Alternatively, companies that sell boats will normally sell them in proximity to lakes, rivers, and oceans…
So in summary, within many markets, where your organisation is selling goods via a network of distributors and where those goods are ultimately being sold to “typical” retail customers, overlaying the population density within a given market map can be very helpful.
- GDP Information - National, Regional and Local Data:
GDP or Gross Domestic Product is a monetary measure of the market value of all the final goods and services produced in a period of time. Many people think of GDP in terms of country-level data and typical financial news headlines. However, for many countries and regions of the world, GDP data is available at different geographical levels, including country, region and also local information, such as County / State, or to local political boundaries.
When looking at your marketplace and assigning sales territories, using local, detailed GDP data can give valuable insight into the potential sales volume within a market area and can also tell you if sales in an area are likely to go up or down.
The information is often available in industry groups, and it’s possible to utilise the most relevant data for your specific industry sector. Take for example the United Kingdom, where it’s possible to download data for 40 sub-regions and areas and see GDP estimates for each, for most industry sectors. Are sales of your product type going up, or are they going down?
On the same basis, an organisation will be able to maximise their potential sales within any given area, by understanding the sales potential that exists and planning resources in the most appropriate way.
Other datasets exist that enable you to understand the GVA (Gross Value Added) which also demonstrates the amount of increase to the economy based in a locality and is a strong indication of consumer spending and discretionary spending levels.
- Purchasing Power Parity (PPP)
Purchasing power parity (PPP) is an economic calculation that compares different countries' currencies through a "basket of goods" approach. Based on this idea two currencies are in equilibrium or at par when a basket of goods (taking into account the exchange rate) is priced the same in both countries. Which is rarely, if ever, the case.
Purchasing power parity information is fairly complicated to generate, and the data has been being produced since 1968 by an organisation called the International Comparisons Program (ICP.) PPP data is published every three years and based on a worldwide price survey comparing the prices of hundreds of various goods.
As an example, let us say it costs $10 dollars to buy a brand of shirt in the U.S., and it costs $15.00 dollars to buy the same shirt in Germany. For every $1.00 spent on the shirt in the U.S., it takes $1.50 to obtain the same shirt in Germany.
The same basis is used when applied over a broad range of goods. This type of analysis can tell us about the Purchasing Power of a country, and also a region or local area. Using PPP data within localised boundaries is where it becomes interesting for product distribution because it is able to suggest the average purchasing power of the people who live in that region or local area. And once again, how much money they are likely to have to spend on your goods…
Once you have compiled the correct data the next step is to be able to visualise the information:
In the past network development teams were employed to produce a planning and market strategy document for each product. However, the task of understanding this data has become simpler in recent years, with the benefit of some software that is dedicated to the task at hand and which will enable you to easily understand and plan effectively.
Whilst many software mapping solutions exist they don’t all enable you to visualise all of the data required in the same place. Being able to overlay multiple data sets is really important if you are to make decisions based on several different factors at once. To do this well, a dedicated data mapping solution is required, and one that supports overlaying several data sources and also enables you to separately upload multiple boundaries or borders to visualise the data within.
The most logical approach is therefore to utilise a purpose-built, sales network mapping and data visualisation tool. A large number of different software packages are available for the purpose of visualising these types of datasets, and for the purpose of reviewing sales networks and territories rather than more complex databases of information, Clear Commercial Solutions recommend the cloud-based software eSpatial. Using eSpatial in conjunction with the datasets already produced makes it simple to:
1. Produce a map which overlays of all the key economic and demographic data such as:
Local Area Population Density
Localised GDP Information
Industry-specific reports and trends by country or region
2. Overlay and visualise all existing distributors and re-sellers, plus the networks of competitors – at the same time.
While a project such as this can initially appear complicated the hard work of compiling most of the data has already been done for you. In addition to this Clear Commercial Solutions support organisations with exactly this type of data generation and planning. We are also available to consult and provide advice at any stage.
If you would like to find out more, please contact a member of our team!