Insight

Hitting Your Growth Targets in Asia


The position of Asia chief executive officer is one of the most demanding roles a manager at a Western multinational can have. As U.S. and European markets have faltered in the wake of the global economic crisis, corporate expectations for this role have shifted from a long-term growth-oriented approach to a short-term profit strategy. Managing high corporate expectations is only one of the many business challenges these executives face; they also need to allocate resources across distinct Asian markets, recruit and retain top local talent, and negotiate with government regulatory bodies for preferential status.

Above all, Asia CEOs at Western multinationals face severe pressure to maintain historic rates of growth. Among my firm's clients, businesses in emerging markets grew an average of 17.3 percent in 2010, and companies expect to grow by 14.1 percent in 2011. Yet, while companies are growing quickly in Asia and other emerging markets, the nature of these results may be opaque and unpredictable. Volatility in performance is driven not just by the nature of the markets but also by an array of obstacles that can powerfully shape sales teams' performance. Nevertheless, Western multinationals are consistently expanding their sales forces to meet the ambitious targets for emerging markets set by their corporate offices. On average these same clients plan in 2011 to grow their sales teams by 13.1 percent and marketing teams by 6.7 percent.

What are some of the challenges Asia CEOs face in building winning sales teams? Not only are good salespeople hard to find, but once you recruit top talent they can be unpredictable in performance and length of tenure. One Asia-Pacific president for a leading European health-care company noted that roughly one-fifth of his sales force in India and China quits each year because employees take better offers from rivals, leading to further costs associated with recruitment and training of replacements. Other Asia CEOs find themselves overly reliant on top performers, depending on a few star salespeople to drive the majority of their sales. "About half of my sales team hits their targets, but the other half consistently underperforms," an Asia CEO for a U.S.-based fast-moving consumer goods firm lamented. "I have aggressive targets and I cannot rely solely on high performers, but how do I get my underperformers to achieve their targets?"

Western MNCs' sales processes in Asian markets have been largely ineffective. There are often insufficient mechanisms to understand on-the-ground nuances and determine what really drives local salespeople. Corporate strategies developed in the U.S. or Europe are too wide-ranging and suffer from being developed independently of local sales teams themselves. Typically only asked to report on performance against sales targets and on competitive intelligence, local salespeople can be resistant to corporate mandates since the resulting sales mechanisms are not fully relevant or customizable to the local market and the local staff members were not involved in the process of commercial strategy decision-making.

Despite challenges associated with building successful sales organizations in Asia, a number of Western multinationals have developed winning formulas to optimize their sales force. The following are three tips from Western MNCs about how to strike a balance between corporate strengths and local nuances to do just that.

Offer Unconventional Incentives

One U.S.-based manufacturing company we work with in Guangdong, China, kept losing its top salespeople to competing firms that offered incremental increases in pay and titles. Senior management began thinking about nontraditional incentive programs and recognized that a significant aspirational purchase in modern China is a personal car. (In 2010 alone, 13.8 million passenger cars were sold in China, according to the China Association of Automobile Manufacturers, making it the world's largest auto market.) The company therefore developed an incentive scheme in which it paid 50 percent of the monthly car payments, allowing the salesperson to own the car in full after a three-year period at the company. The practice instilled loyalty, improved customer relationship management, and led to a reduced turnover rate of key sales staff.

Create Visibility to Drive Performance

One Fortune 500 technology company with years of experience in Asia ranks its salespeople in the region across a series of key performance indicators (KPIs) related to customer acquisition and retention as well as salesperson efficiency and effectiveness. Rather than keep the results confidential, this company chose to create an online dashboard that tracks employees' performance across all KPIs on an ongoing basis, ranking them in five tiers based on performance. The results were impressive. Employees in the middle of the pack strove to move up, especially those in the third and fourth tiers who were most concerned about their standing; meanwhile salespeople in the fifth tier were automatically placed on a rigid coaching program. This unique approach led to healthy competition that drove continuous improvement and weeded out consistently low performers who were not worth investing in over the long term.

Establish a Team Approach to Sales

One European consumer goods company operating in Asia chose to build loyalty by making its employees feel like part of a team. It hired experts in each of the customer segments it focused on and set up processes within the local sales organizations to encourage sharing of expertise and team-developed best practices. They set a common sales goal for each team and promoted group problem-solving at account presentations, which improved team cohesion and fostered company loyalty. Overall, they found that team-based selling processes lower turnover in Asian markets by building relationships within the sales force. They also minimize disruptions in service created by the loss of any individual sales manager.

Asia CEOs have to be creative to hit their targets in China, India, and other emerging markets. Sales force management continues to rank high on the list of their challenges in the region as the competitive environment for top talent in Asia grows fiercer. Top-performing Asia CEOs have found that success requires striking a balance between corporate and local strengths to address the complexities of these markets. Whether it is localizing the sales force to achieve ambitious sales targets, reorganizing distribution networks to reach consumers in third-tier cities, or building a decentralized organization with the authority to make fast decisions in rapidly changing environments—the Asia CEO is one of the most dynamic roles in Western multinational companies today.


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