unearthing improvement opportunities where the greatest savings can be achieved with the least sacrifice. Such benchmarks can help to prioritize the many cost-cutting options that are possible. With targeted sales benchmarks and a relevant peer group, a CPG sales leader can proactively propose new efficiencies rather than wait for them to be imposed by others in the organization.

To help sales executives in their efforts to assume this leadership role, Deloitte and Sales Benchmark Index (SBI) have amassed industry intelligence and analyzed it to identify key ways a CPG sales leader can realize substantial and sustainable savings.¹

1. Modify the sales organization’s structure to lower costs and improve productivity

Sometimes, sales organizations are more complex than they need to be. Maybe the problem is too many layers of management or too many regions. The rule of thumb is that greater complexity equals higher administrative (nonproductive) costs.

With that in mind, Figure 2 shows “sales force size per $1 billion in revenue” for the CPG industry. A benchmark median of 599 tells the fictive Acme company that they are likely overstaffed with 743 sales heads. The median CPG company is generating the same $1B in revenue as Acme with 20% fewer heads, while the top quartile is able to accomplish the same objective with 50% fewer. Such a gap to benchmark and top quartile performance indicates a likely cost savings opportunity for Acme.

Improving the quality of your sale organization’s span of control is important, and diagnosing it goes well beyond the one metric in Figure 2. The takeaway is clear: collapsing geographic territories can reduce sales support costs, while increasing spans of control can lower sales management expense.

2. Automate to reduce the time and cost of sales administration

In many CPG companies, the sales organization is not leveraging technology to its greatest potential. For example, we’ve found that a large number of CPG manufacturers use spreadsheet or other desktop applications to harmonize data and determine the effectiveness of promotional programs.

Above and beyond conventional sales force automation tools, technology can free-up precious selling time for the sales force. That equates to money for the company. For example, planning tools and analysis templates can reduce “start from scratch” procedures, while standardizing back office processes – two advantages that not only reduce costs but free the sales force for more productive activities.

Figure 2. Sales Force Size per $1B Revenue

1,000

982

800

743

600

599

428

400

200

0

Acme Bottom Quartile

Source: Sales Benchmark Index

Benchmark

Top
Quartile

Hand-in-hand with technology goes better training, which can be extended beyond the use of the tools to include sales techniques, such as relationship building.

3. Minimize external purchases to save money Some sales expenses – such as budgets for travel, entertainment, and “perks” (autos, conferences, and meetings) – will have to be reduced. There are more than several ways to “skin the cat.” In some cases, the reduction in one large expense can be offset by increased efficiencies in other areas that more than compensate for the loss. For instance, improved route planning can enable a salesperson to call on more accounts in the same time or deployment of video conferencing webinars can help maximize selling time while also leading to a better work/life balance.

First, facts – then, actions To find and exploit the best opportunities to cut the fat – but not the muscle – from the sales organization, you need a methodical approach that creates clarity and enables purposeful activity. We suggest you begin by establishing a baseline against a peer group. How does your sales organization compare with others? Where are the most likely improvement opportunities? Objective, empirical data put a solid frame around your budget planning process, giving you the power to control the cost cutting process.

Your annual budget can reflect cost savings, while also addressing any customer and market risks that might attach to the proposed cuts. By being proactive, you can realize the benefits of a new cost structure quicker; if you wait, you’ll more likely suffer the pain of having cuts forced on your organization, when sales don’t materialize or unexpected cost increases creep into the budget. By taking the initiative, you can keep budget cuts focused and appropriate.

The right benchmarks and business intelligence can give you the power to reduce spending, while improving performance, at the same time.

Endnote:

1

Sales Benchmark Index (SBI) repository data, July 2008.

For more information, please contact:

Larry Hitchcock

Principal, Sales & Marketing Practice Leader, Consumer Products Deloitte Consulting LLP lhitchcock@deloitte.com

Scott F. Russell

Senior Manager, Deloitte Consulting LLP scrussell@deloitte.com

Mike Drapeau

Partner, Sales Benchmark Index ( www.SalesBenchmarkIndex.com) Mike.Drapeau@SalesBenchmarkIndex.com

To learn more, please visit www.deloitte.com/us/consumerproducts.

About SBI

Sales Benchmark Index is a strategic sales advisory firm that helps executive leadership understand how well their sales force is performing relative to a peer group and world class levels. Sales Benchmark Index is differentiated through its use of empirical data, a repository of 10,900 companies across 19 industries, 11 years of history and over 200 sales metrics. Through SBI’s sales benchmarking services a company can deploy comparative data sets to identify improvement opportunities available through leveraging the best practices from world class sales forces.

About Deloitte

Deloitte refers to one or more of Deloitte Touche Tohmatsu, a Swiss Verein, and its network of member firms, each of which is a legally separate and independent entity. Please see www. deloitte.com/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu and its member firms. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Copyright © 2008 Deloitte Development LLC. All rights reserved.

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