Starkey Case Study

Challenge

Recapture market share that had eroded along with margins in the increasingly competitive hearing instrument industry.

Solution

Sales Growth Specialists helped the company create a culture of accountability to yield predictable, sustainable revenue.

Results:

• Market share has grown despite a flat industry.
• Sales management processes yield predictable revenue for more accurate business planning, more efficient operation and higher margins.
• Faster, organized sales process generates revenue more quickly.
• New hires reach higher performance levels 30% faster.

Creating a culture based on accountability

Starkey Laboratories had been a successful manufacturer/distributor of hearing aids since its founding in 1967. Reputed for exceptional quality and service, the company’s instruments soon gained impressive market share in what is today a $2 billion industry. But in tandem with the onset of industry consolidation, Starkey’s market share began to wane. “Looking back,” says President Jerry Ruzicka, “founder Bill Austin, an exceptional salesperson, and was the driving force that propelled sales. He was so strong, in fact, that the sales force simply followed his lead. Without formalized sales management systems, there was no foundation for a consistently successful sales effort.”

Charged with corporate improvement, one of Jerry’s earliest top priorities was to transition the organization from single-person dominance of the older, smaller Starkey to a culture of accountability in the large corporation it had become. The transformation would require establishing processes throughout the organization, especially in the sales management arena.

Jerry acknowledged that while establishing the right processes would build predictable revenue and help the company reverse its sagging market share, the initiative would initially generate culture shock. “Internally and externally, Starkey was viewed as strong. Bill Austin was a tremendous salesman. The company wore the halo. So people understandably wondered why we were rocking the boat.”

The Right Stuff

Danita Bye, president of Sales Growth Specialists, was used to rocking the boat and helping CEOs take their companies to the next level by establishing sales management processes. “Starkey had no formal evaluation for determining if a sales candidate offered the qualities required for success, including personality traits, belief systems and behaviors. As a result, many sales people were unqualified for their selling role in a highly competitive environment,” she explains. “Although all had acquired tremendous product knowledge, many had little or no sales background, so we needed to determine their aptitude for succeeding in selling as a business partner.”

So Danita helped the company create a formalized evaluation process for discovering who could do the job long term, and she helped the sales managers develop coaching plans for improving current staff performance. Beyond customizing an objective assessment tool for the company, she tailored the tool for the territories’ unique needs such as demographics and competition. “This positioned Starkey as a business partner and opened the door to discussions about how to handle objections.”

The assessment tool served as the heart of a candidate screening process that the company used. As a result, new hires reached higher levels of performance more quickly. The process reduced ramp-up time by 30 percent.

Aligning Corporate Goals with Performance

Perhaps the most wide-sweeping change the company made with Danita’s assistance was linking individual sales person performance to company strategies and objectives with a scorecard that defined accountabilities – activities and expected results. This focal point for accountability not only helps sales managers monitor individual performance, but also points out gaps between results and expectations that require coaching and/or additional training.

To maintain the alignment between personal and corporate strategic objectives, the scorecard is an essential part of the review process, which assesses performance and ties an individual’s performance to their compensation. Job descriptions support the process, specifying job functions and key measurements. Instead of receiving a flood of reports, the list was reduced logically those that focus on those key measurements.

Change is good

Was it an easy road? “People never like going through a process like this,” Starkey’s CEO explains. ‘The unknown can cause fear, but obtaining manager buy-in early in the process was a key driver of our successful implementation. Our initiative was based on building a better, stronger, more aligned sales organization through sustainable processes.”

Starkey’s sales organization is thriving in the environment that Sales Growth Specialist help the company create. Their culture of accountability empowers sales people to capitalize on opportunities and make them successful.

“Before we began working with Danita, the sales organization had no idea about product costs and margins. Arming our sales people with this information has helped us grow in a declining market,” says Jerry.

Revenues

In addition to expediting the overall sales process, the sales force is accountable for new-product introductions, which used to be dependent on one person’s direction. “We no longer wait for direction. Everyone has their own goals and objectives and the liberty to act on them,” Jerry says.

Larry Miller, vice president of human resources, describes Danita as a catalyst. “She provided meaning and structure to sales at Starkey. She helped our sales managers gain a better understanding of what behaviors and/or tasks to reinforce and link those behaviors to results and compensation. She raised awareness about average selling price, product mix and margins to help us sell with a purpose. And she introduced us to quarterly personal selling plans that support corporate goals.”

The shift from competition among divisions to personal accountability for average selling price and margins (instead of units) has generated open communication among sales people. In this win/win environment, they willingly discuss what seems to work for them personally and share their successes.

The transformation from an inconsistent unconscious competence to a system of manageable processes paid off when Starkey successfully introduced a new line of 14 products in the fall of 2001.

Today there are 1,900 Starkey employees in the U.S. and 3,300 worldwide. Revenues in 2002 were $380 million. A winning combination of advanced technology and best practices has helped the company continue to grow its market share despite the industry’s recession.