Transforming Your Salesforce
Edition: November 2002 - Vol 10 Number 11
Author: Dave Kahle
Following is an excerpt from Facing the Forces of Change Outlook 2003, a report on wholesale distribution published by the National Association of Wholesaler Distributors’ Distribution Research and Education Foundation (DREF) and Pembroke Consulting, Philadelphia, PA.
While it may be unclear what your salesforce may end up looking like a few years from now, it is clear that it will need to change. Every scenario foresees a salesforce that I characterize as being more competent, more directable and more flexible. In order to gain an understanding of this, let’s first define our terms.
Competency. A competent salesforce is one in which salespeople have learned the basic competencies for their job and are well on their way to mastering each of them. A competency is a group of skills, concepts, strategies, processes and tools that form an essential part of the job. It is the nature of a competency that one must have a minimum level of skill in order to be in the game at all, and then must commit to a lifetime of improvement.
The advantage of taking a competency approach to developing your salespeople is this: Once you gain a competency, you can use that skill set in a wide variety of situations. Once salespeople gain a set of competencies, they can use them in what promises to be a rapidly changing set of sales challenges.
Directability. When given direction by management, salespeople must follow that direction. That sounds so simple, yet it is incredibly elusive. Here’s an exercise to test for the directability of your salesforce.
Imagine that a key manufacturer approaches you with a hot new product. It is important to the manufacturer that the product gain market share quickly….You gather your salesforce together, have the manufacturer present the product and then tell the assembly that this manufacturer is important to you and the company must perform. You give the salesforce a direction: “This product is to be introduced in every good account in the next 30 days.”
Now, here’s the test of directabilty. To what degree can you honestly say that your direction will be followed? Can you honestly say that every salesperson would introduce that product in every good account in the next 30 days? That’s the measure of directability.
Flexibility. Flexibility refers to that characteristic of a salesperson who willingly accepts change and works at building new behaviors into his/her routine in response to direction from the company. Flexibility, to a degree rarely seen in the past, will be a necessary requisite for a salesperson…. This year you may ask your salesforce to adjust to a new compensation program. Next year it may be modifications in your salesforce automation system; the following year a major revision in territory or account responsibilities, then a significant adjustment in the lineup of manufacturers you promote, etc. The inflexible salesperson will be a drag on your company’s energies and emotions.
Initiatives for 2003
From my perspective as a sales consultant, I see the almost universal need to seriously consider a number of initiatives that impact the salesforce and move toward the goals of a competent, directable and flexible salesforce. They are:
· Refine your sales compensation plan.
· Solicit, and act upon, customers’ view of your salesforce.
· Find out your customers’ wants.
· Inject accountability.
· Work at developing the salesforce.
1. Refine your sales compensation plan. The typical distributor has a compensation plan that is a vestige of earlier times…. The plans are rooted in history, not strategy…. The most common distribution compensation strategy is to pay field salespeople a percentage of gross profit for every purchase made by the accounts to which they are assigned. That is a simple and easy calculation to make, and it encourages salespeople to scoop up any business they can find. However, it means that the salespeople can never become more productive!
Productivity is defined as the output created by an investment of labor or money. So, if your warehouse person can pick 100 items per hour and you pay him $10 per hour, you could roughly define productivity as 10 items picked per dollar. If you could somehow arrange for your warehouse person to pick 120 items per hour, than he would be more productive: roughly 12 items per dollar. If at the same time, however, you increased the warehouse worker’s rate of pay to $12 per hour, you would have lost the increase in productivity and be back to a productivity rate of 10 items picked per dollar.
As long as salespeople are compensated by a fixed percentage of gross margin, they can never become more productive. If you pay them 10% of gross profit, you get $9.00 of margin contribution in exchange for $1.00 of investment. If they double their sales, you still maintain the same productivity, because it still costs you the same for every dollar of income.
2. Solicit, and act upon, customers’ view of your salesforce. It’s not news that customers’ expectations of your salesforce are changing. Nor is it out of line to be considering what your future salesforce will look like. On one hand, you read that customers don’t want to see salespeople and that e-commerce will render the distributor salesperson obsolete. On the other hand, you have a growing number of customers who indicate that they want to buy more from fewer vendors and desire an even greater relationship and more intensive involvement with your salespeople.
Facing the Forces of Change highlights the complexities of sorting all this information out. While 52% of customers say they feel it likely that the Internet will replace the distributor salesforce as a means of providing information to customers in 2006, 48% feel that this is unlikely or are not sure. It is important to remember that not all customers are alike.
You need to gather accurate information on what your customers really want from your salesforce. While you may think you know your customers’ preferences, it is important to confirm (or refute) those assumptions by testing your understanding with external, objective data from customers.
3. Find out your customers’ wants. Here are three specific initiatives you can undertake to discover what your customers want to see from your salesforce.
Hold focus groups. A focus group is a small gathering of five to 14 of your customers. They come together under your sponsorship, usually under the guidance and facilitation of an outside third party, and discuss aspects of their business and their relationship with you…. In one recent focus group that I facilitated, customers said they wanted these things from distributor salespeople who called on them:
· Don’t waste our time.
· Know our business.
· Help us grow our business.
· Help us buy more from fewer distributors.
Simplistic as it may seem, this kind of feedback could very well form the foundation for a wide-ranging revision of your sales system.
Arrange management visits. There is no substitute for making face-to-face calls on your good customers at their location, without a salesperson present. This yields lots of positives. First, you’ll have a good day—no frustration with all the details back at the office. Instead, you’ll spend time with your customers, who will be flattered that you are there. They’ll pay special attention to you, provide you information you won’t get any other way. Secondly, you’ll gain good information, if you ask the right questions. Inquire about what is going on in their business and what they want from your company and your salespeople.
Conduct Internet surveys. Rather than rely on what other people say your customers think, why not find out for yourself? Create an Internet survey, asking questions that are important to you, and invite customers to respond via one of the multiple websites that provide this service….
4. Inject Accountability. The days when a salesperson could be encouraged to “run his own business” are long gone. Tomorrow’s salespeople will need to be highly productive and highly directable. That means management must establish an expectation of accountability and a system to ensure its ongoing implementation.
A necessary prelude to holding salespeople accountable is to decide for what they should be accountable! And, while the exact focus can and should change from time to time, the principles and processes should remain relatively stable. Start out with this question: “What do I really want them to do?” The answer should not be “Sell, of course.” That answer was sufficient in the days when you didn’t care about what they sold, how they sold it, at what margins they sold it or to whom they sold it. Today, you probably have clear goals in mind for each of those variables. Turn your company goals into sales goals.
Once you’ve established goals for the salesforce in a specific manner, you need to instill a management practice that asks each salesperson, on a periodic and regular basis, this question: “Did you do what we asked you to do?” …The answer to that question will lead to a discussion, and that discussion should lead to some specific action steps.
5. Work at developing the salesforce. It is likely that your review of what your customers want, coupled with your ruminations on directability and productivity, will lead you to the conclusion that your salesforce could operate in more effective ways than they do now. That realization will lead you to the conclusion that you need to provide the means by which your salespeople learn the skills and mindsets necessary for success in the next decade. You’ll come to the conclusion that you need to develop your salesforce. Develop means to provide both the basic training and the stimulus for continuous improvement…..
I am always amazed at the lack of investment in training and development that characterizes the typical distributor. In most distribution companies, salespeople receive no training in the competencies of an effective professional salesperson. They spend a few days in the warehouse, help out on the customer service desk, ride with a more experienced salesperson and then are set out on their own. As a result, they often develop inappropriate habits and work hard to avoid scrutiny and accountability. They never learn the best practices of the best performers in their industry. Nor are they personally challenged to modify their habits and routines to become the kind of professional salespeople this economy demands.
The greatest unrealized asset in most distribution companies is the untapped potential of untrained salespeople. This year is a great time to begin to change that. Reexamine your system for training and developing your salesforce. Identify best practices of the industry’s best salespeople.
About the author: Dave Kahle is a consultant and trainer who helps his clients increase their sales and improve their sales productivity. His new book, The Six-Hat Salesperson: A New Paradigm for Salespeople in the Information Age, is available in bookstores or from The DaCo Corp. For more information, or to contact the author, contact The DaCo Corp., 15 Ionia SW, Suite 220, Grand Rapids, MI 49503; phone 1-800-331-1287; fax 1-616-451-9412; firstname.lastname@example.org. His website is www.davekahle.com.