Microtech Case Study.
A fledgling provider of custom, in-the-ear hearing instruments, forced to adopt a wholesale approach due to lack of funding, had to develop a strong sales organization that would help it grow profitably.
Danita Bye created a successful sales force by establishing sales management processes that the company continues to use today.
Bottom Line Results
- Company has grown to $28 million in annual revenue
- Sales management systems drive profitability, generating 40% gross margins
- Sales representatives increased contacts with decision-makers 400%
- New products catapulted to 30% of total sales in just six weeks
Hearing the Call for Sales Management Systems
When funding sources dried up a year and a half after Larry Hagen founded Micro-Tech, he was forced to alter his business model from a patient-direct provider of custom, in-the-ear hearing instruments to a wholesale organization. Instead of serving patients who would come to Micro-Tech outlets, Micro-Tech would have to call on audiologists, hospital clinics and private clinics to proactively sell its products. Larry’s sudden, urgent need for a strong sales force prompted him to recall a radio interview about the “science of sales.”
“The concept, which seemed advanced for 1983, was captivating. I had thought of sales as an art,” he explains. “But sales as a science based on a series of proven procedures sounded valid. And today, as a veteran entrepreneur, I can say that young companies need a variety of systems. While some entrepreneurial organizations can do well following pre- established systems, most do not have the level of experience required to develop those systems. That’s probably why a large percentage of these companies do not make it. I know we would not be realizing gross margins of 32-45% without our systems.”
But Micro-Tech made it thanks to Larry’s foresight in bringing Danita Bye on board. She joined the company as a salesperson, having had a stellar track record at Xerox. As she won new accounts that required additional sales personnel, Danita assumed the role of sales manager. “Not all sales people make good managers,” Larry says, “but Danita’s adherence to a prescribed set of activities reminded me of the ‘science of sales’.”
All of our sales management systems – commission structure, recognition, reporting, collaborative quota setting – were aligned to create a disciplined, high-performance sales organization.
Creating a Culture of Accountability
Danita had developed a keen appreciation of sales management processes and the disciplined environment that she thrived in at Xerox. Her success prompted her to build on those processes to drive Micro-Tech’s growth. “All of our sales management systems – commission structure, recognition, reporting, collaborative quota setting – were aligned to create a disciplined, high-performance sales organization,” Danita says. Sales representatives developed monthly and quarterly business sales plans that documented account strategies and tactics to achieve quotas and forecasted results of implementation. This account planning was the foundation for personal accountability and company growth. One of the earliest evidence of progress was the increase in sales contacts with decision-makers from 5 to 20 per day. She believes that the sales organization’s success was a direct result of the empowerment created by these systems.
Sales Management Systems Drive Growth
In addition to creating a culture of accountability, Danita developed a new business-development process that included prescribed call timing, direct mail and follow-up. This was a sophisticated sales approach that was far ahead of its time. In fact, Micro-Tech was the only hearing-instrument company conducting telesales at the time. And it worked to their advantage. Micro-Tech was able to catapult sales of one new product to 30 percent of total sales over a six-week period, while the company’s technology partner in Canada, relying on face-to- face sales, was at two to three percent in just six months. There was more. Danita refined the company’s recruiting system by creating scorecards for assessing resumes, telephone screenings, and in-person interviews. She not only demanded a college degree because target buyers held masters degrees, but she also instituted an assessment tool that ensured a person’s belief system supported sales success. Once hired, Danita’s coaching process was designed to improve the performance of good people. Through evaluating performance by comparing business plans with reports and monitoring telephone calls, Danita was able to help each representative personally in a positive, supportive manner.
Re-engineering Micro-Tech taught me that there are three departments that a business like ours should focus on: R&D, manufacturing and sales/marketing. It's imperative that each of these functions develop and work within systems.
Louder than Ever
Micro-Tech continues to use the systems that Danita developed more than 10 years ago. “In fact,” according to Larry, other companies have tried to mimic our systems, a testimonial to our industry leadership.” A stickler for systems, he adds, “Re-engineering Micro-Tech taught me that there are three departments that a business like ours should focus on: R&D, manufacturing and sales/marketing. It’s imperative that each of these functions develop and work within systems.” Danita’s successor, Lisa Kagel, credits her predecessor with providing her a solid foundation for her first sales position with Micro-Tech. “I joined the company fresh out of college with no sales experience. The disciplined structure that Danita created provided outstanding training in all aspects of the selling process.” In her current position as national sales manager, Lisa has adopted some of Danita’s disciplined sales management processes and continues to appreciate her assistance with training new sales people, troubleshooting with sales representatives, and brainstorming about hiring, coaching, new product launches, and other sales management challenges.