Business Management

Sales: how to increase margins by standardising the system

The effectiveness of a structured system extends beyond the individual: from healthcare to sales, standardising processes reduces errors and improves results

4' min read

Translated by AI
Versione italiana

4' min read

Translated by AI
Versione italiana

In the late 1990s, at Great Ormond Street Hospital in London, there was a seemingly inexplicable mystery: although operations in the theatre were successful, some patients did not survive the ten-minute transfer from the theatre to the intensive care unit. One evening, two doctors at the hospital watched a Ferrari in the pits on TV: in seven seconds, twenty men carried out a perfect pit stop. No one spoke, yet everyone seemed to know exactly what they had to do. This realisation led the two healthcare professionals all the way to Maranello with a single goal in mind: to explore this methodological approach to work. It was at Ferrari’s headquarters that an insight emerged, prompting them to rewrite the ward’s procedures by establishing a pre-defined sequence comprising checklists, fixed positions and a leader at the helm of the team.

This reorganisation of the process has led to a 67 per cent reduction in critical errors during handover. The same doctors, the same patients, the same equipment. What has changed is the system.

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It’s not talent, it’s the system

In Italia, according to the latest ISTAT report, 42.4 per cent of the drinking water fed into the distribution networks does not reach the tap. The reason for this loss lies in the system itself: old pipes, faulty joints and a design that no one has ever questioned.

The same line of reasoning can be applied to the commercial context. When sales results are unsatisfactory, companies tend to look for the problem in the person (by replacing a salesperson), in the technique (by running a new training course) or in the product (through discounts or repositioning). These three levers, whilst legitimate, overlook the variable that accounts for most of the variation: the process through which that person, using that technique, sells that product.

This argument is not a comfortable one, as it strips the profession of its romanticism. The salesperson is not the hero of a film; they are a variable within a system. And a system, if poorly designed, can make even the best salesperson mediocre.

What does it mean to work by process

In the book *i*Noise, Daniel Kahneman highlights how there is a hidden variability within human decision-making that almost nobody takes into account. Two doctors looking at the same X-ray arrive at different diagnoses; two salespeople receiving the same lead close deals at different times and on different terms. This happens because of ‘noise’ – errors in reasoning that occur in response to random variability at the moment a judgement is made or a decision taken. This makes them even more insidious than the better-known biases: whilst the latter are systematic distortions, noise is random variation.

The most effective ‘antidote’ for mitigating these inevitable cognitive biases is to establish a rigorous process that reduces the scope for discretion and improvisation. In a commercial context, this translates as:

• named and sequenced stages, each characterised by a stated objective and a criterion for determining when it has been completed;

• templates and checklists, such as standard questions to ask the customer, criteria for qualifying a lead, a list of objections and the corresponding responses;

• conversions measured at each stage. As with water mains, leaks can only be detected by measuring pressure and flow rate in each section. Without this data, it is difficult to determine whether improvements are needed in terms of qualification, the proposal or closure;

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• systematic debriefing, i.e. feedback following the most significant negotiations, aimed at analysing what worked and what could be improved.

For example, a B2B pipeline that converts 12 per cent from lead qualification to proposal and 70 per cent from proposal to close does not have a closing problem, but a lead qualification problem. That’s where the margin lies – even before the sales representative begins negotiating. Without measuring each stage individually, there is a risk of tackling the problem with the wrong solutions, such as buying another course on sales techniques or authorising deeper discounts.

The margin is hidden within the system

The story of the engineers at Maranello is not just an anecdote about the ingenuity of Formula 1. It is a reminder that, almost always, the margin of success does not depend on a single brilliant component, but on the system within which that component operates. When the figures don’t add up within a company, the right question to ask is not ‘who made the mistake?’ but ‘where is the system failing?’.

Harvard Business Review reports that organisations which standardise their business processes see an 18 per cent increase in turnover compared with those that have not formalised them. This is because a carefully designed process enables organisations to understand which stage they are at, anticipate what to expect and prepare accordingly. This makes results predictable – and therefore manageable – that would otherwise be at the mercy of three factors: personal experience, improvisation and the subconscious.

*Director of the Academy of Strategic Communication

**Senior Associate, Academy of Strategic Communication

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