Theory Of Constraints In Sales Management

Theory of Constraints (ToC) is a management principle that states that output is essentially limited by one constraining process and by resolving this constraint, you may increase your output. This is another way of saying that you are only as good as your weakest link.

A sales team works with a number of constraints – the number of people in your sales force, the average number of outreaches each member of your sales team can handle, the number of clients your implementation team can handle, the number of leads generated by marketing, and so on. Increasing capacity on each one of these constraints could theoretically contribute to an increase in sales. But increasing the number of leads without an increase in the outreach capacity could waste precious marketing resources. Similarly, increasing outreaches (and consequently converting more customers) cannot happen before raising the bandwidth of your implementation team.

Identify The Weakest Link

In most sales organizations, at least one component of the process is under-utilized because of a weak link. For instance, the inbound sales team could be under-utilized because marketing has not been generating enough leads. Or, your outreach team is not at hundred percent capacity because they do not have a steady stream of prospects to call. Constraints are not always presented from an external source. Many times, there could be constraint within a team as well. For instance, your outreach team may also be responsible for building a prospect list. When you make people who specialize in calling prospects to also handle the job of shortlisting them, your team capacity is hindered by constraints from within.

Outsourcing

Hiring specialists for a job can be a long-drawn affair. The first step towards resolving constraints in your sales management process should be through outsourcing. This makes it easy for your organization to hire qualified workers fast and also fire them when you have resolved the weak links. There are agencies that specialize in generating sales lists or translating unstructured sales notes into useful information. Outsource the processes that are preventing your teams from functioning at full capacity.

Sandboxing New Resources

Fixing your constraints through addition of new resources could potentially create new challenges to your sales process. One of the most common challenges is the perceptible difference in quality of output. The leads generated by an external agency may not always match up to those generated by your in-house teams. You may also find a significant difference in the conversion rate of customers reached out by an external agency when compared to what is achieved by your sales force.

Search marketing has a concept of ‘sandboxing’. This is a method through which search engines like Google inhibit new websites from performing well till they establish age, trust and authority. To fix quality differences between existing resources and their newly hired counterparts, it is important to ‘sandbox’ the output from the external agency and assimilate them into your own sales pipeline only after it has been properly sanitized. One of the most effective ways to sandbox fresh resources is by routing their output through a dedicated bunch of SDRs whose performance has already been measured with regular processes. This makes it possible to benchmark the quality of your new resources against existing resources.

Assimilation

Sandboxing makes it possible for a sales team to hire and fire resources without impacting the existing sales process. Once an agency has established its quality, you may remove the sandboxes and assimilate their output with your existing resources. It is also important to remember that outsourcing is not always a permanent solution. For long-term resolution, it is important to start hiring new resources who could supplement your existing resources.

Theory Of Constraints is a continuous process. Once you have identified the weakest link and have figured a resolution mechanism, the next step is to find the next weakest link in your sales management process to fix. In some ways, TOC in sales management is all about hiring high quality new resources who can supplement your over-utilized resources to make sure all components of your sales machine run at full capacity and maximum efficiency.

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