Many companies struggle to deliver a consistent and easy buying experience for their customers.
Consider the following scenario: A manager wants to purchase some computer software for her business. She asks an analyst on her team to do an online search for information. The analyst recommends a particular software company’s solution. The manager peruses that company’s website and requests more information by entering data about her needs through a webform. The software company emails relevant materials which the manager reviews before reaching out to an inside salesperson with questions.
But then things begin to break down. The inside salesperson hasn’t seen the webform data, so the manager must repeat much of the information she had already entered. Furthermore, some of the advice the inside salesperson shares contradicts what the manager recalls reading on the website. The manager decides to meet with a field salesperson to get clarity and
Many industries have had to downsize sales forces. There are several reasons for recent sales force job cuts:
Shifting market dynamics are one cause, including changing customer needs, customer consolidation, new buying channels, and slowing market growth. Merck recently publicized that it planned to lay off about 1,800 U.S. sales reps following an industry-wide downsizing trend. The trend is attributed to the growth of digital communication channels and reduced access to physicians, who increasingly prefer to get product information online.
Changing company strategies is another, including new strategic product/market priorities and shifts to e-commerce. Microsoft recently reported it was cutting up to 4,000 global sales and marketing jobs and refocusing field sales effort on specialized growing markets in cloud computing, data analytics and artificial intelligence. At the same time, sales of simpler products were moving to lower-cost channels.
The desire for productivity improvement is a third, including eliminating inefficiencies
Even the best sales forces can’t keep every good salesperson. Loss of salespeople to competitors occurs frequently in high-growth industries in which the demand for experienced salespeople exceeds the supply, such as in fast-evolving technology markets. Poaching of salespeople also occurs when sales are driven largely by relationships. For example, wealth management companies frequently recruit advisors who have built a strong book of business at competitive firms.
Companies facing high sales force turnover situations can try to reduce undesirable loss of salespeople, but they should also use another strategy, by taking steps to reduce the negative consequences on customers and the company when salespeople do leave, as some inevitably will.
These strategies focus on minimizing sales loss during three critical phases surrounding a salesperson’s departure – the withdrawal period, the vacancy period, and the hiring/orientation period.
To motivate, manage, and reward B2B salespeople, many companies use sales incentive plans that link large commissions or bonuses to individual results metrics, such as territory quota achievement. As digital channels continue to reduce and redefine salespeople’s role in customer buying, these traditional sales incentive plans are becoming less effective at driving sales outcomes.
The right sales incentive plan creates a double win. Salespeople win because they are rewarded for their hard work and good performance. The company wins through a better-motivated sales team that produces short-term results and is more likely to achieve company goals.
For a sales incentive plan to produce this double win, there are two necessary conditions:
Salespeople must have a large impact on sales results by focusing on activities that add value and directly influence customer buying decisions.
The company must have the ability tomeasure individual results by separating out each salesperson’s contribution and
Success in a sales force requires having strong talent up and down the organization. A weak salesperson will weaken a sales territory, a bad sales manager will damage their team and dampen results in their region, and a poor sales leader will eventually ruin the entire sales force. For even the most seasoned among us, it can be difficult to recognize the signs of a poor sales leader and the possible damage the person can do — especially when they appear to do some good early on.
Consider two examples.
An education technology startup hired a sales leader who came from a large, well-respected firm. He had extensive market knowledge and a stellar track record. Although good at scaling and operating a sales organization, the leader was unable to succeed in a rapidly changing environment that needed experimentation and nimbleness. The mismatch between the startup’s need and the leader’s capabilities set progress back at least a
Most sales forces focus a good deal of their attention on the short term — on bringing in today’s sales or making this quarter’s numbers. It’s understandable: The sales team wants to be successful. Quarterly goal attainment is a visible measure of success, and often a determinant of incentive pay. Analysts and investors track company performance against quarterly goals, so company executives push the sales team to deliver on the company’s promise to the investment community. Sales leaders divide the national sales goal among sales managers, who allocate their portion of the goal to their salespeople.
In short, everyone feels the pressure to deliver quarterly results.
But sales forces that are managed only to meet short-term needs can drift into mediocrity. In extreme cases, the sales culture can become toxic, as salespeople make minor ethical compromises to reach short-term goals, and those behaviors evolve and spread. Over time, sales forces that
In early September Wells Fargo agreed to pay a $185 million fine and return $5 million in fees wrongly charged to customers. The settlement stems from the bank’s employees allegedly opening more than 2 million bank and credit card accounts without customers’ permission. The CEO of Wells Fargo, John Stumpf, apologized in front of a congressional panel Tuesday, saying in a statement, “I accept full responsibility for all unethical sales practices.”
That speaks to why they did this in the first place: To meet sales quotas and earn incentives.
This is certainly not the first time that a high-profile sales scandal like this has hit the press. In the early 1990s Sears sought to restore its reputation with $46 million in coupons because some employees of its automotive repair division (who were paid a commission on sales of parts and services) had allegedly enticed customers into authorizing and paying for
Sales leaders have a deep-seated belief in using stretch goals to challenge a sales force. Stretch goals are correctly credited with guiding effort, promoting innovative thinking, energizing salespeople, and boosting persistence. Many successful companies have lived the virtuous cycle: Sales leaders set a stretch goal, the sales force surpasses it, and sales force morale and confidence gets a boost. But we’ve also seen, with increasing frequency in the last decade, companies set stretch goals that are impossible to achieve. What masquerades as a stretch goal is really wishful thinking or misguided sales goal padding.
When a majority of salespeople miss a goal, it can be due to an unforeseen event, such as a market downturn. But too often it’s because the management team set the goal too high in the first place. This can happen in any of the following ways:
The aspirations of company leaders are running ahead of
In sales, where charisma and extroversion can be advantages, some people attribute success more to inborn personality traits than to skills that can be coached or taught. Yet the fact that companies in the U.S. alone spend more than $20 billion annually (by conservative estimates) to train salespeople on products, selling skills, and territory management, demonstrates the widespread belief that you can help “make” salespeople great.
Most sales leaders would agree that salespeople who possess certain innate personality characteristics, such as curiosity, empathy, and drive, are more likely to be successful. (Consider the saying: “Although you can teach a turkey to climb a tree, it’s much easier to hire a squirrel.”) But there’s a big difference between individual success in sales and success across an entire sales force. Whatever the born/made balance for a single salesperson, great sales forces are made.
Even if you believe that most great
One hundred years ago, an article in the New York Times asked a provocative question: “Are salesmen needless?” In the article, a marketing expert explains why societal shifts would render the door-to-door salesman obsolete. “Advertising is producing better results than the old method of personal solicitation,” the article reported. “Things were different once upon a time before the railroads turned farms into cities… The traveling [sales]man is a middleman and the evolution of business is gradually eliminating the middle man.”
That 1916 prediction didn’t prove true. Over the next fifty years, sales force numbers kept expanding—but even as they did, pundits kept predicting the field of sales would soon enter a decline. In the 1962 book “The Vanishing Salesman,” author E.B. Weiss wrote about the “new age of self-selection and self-service” and how pre-selling, branding, and advertising would eliminate the need for traditional salesmen. (To his credit,
Over the past 20 years, information technology and digital channels have changed the way consumers shop for products ranging from cars to homes to electronics. Those forces are dramatically changing the way B2B companies and their customers approach buying and selling, too.
Business buyers are more connected and informed than ever before. Sellers must respond. For buyers and sellers alike, this creates complexity, anxiety, and opportunity all at the same time.
From the buyer’s perspective, information technology and digital channels provide access to information and enable self-sufficiency. When a buyer wants to learn about virtually any product or service, an internet search yields thousands (if not millions) of results, including online articles, videos, white papers, blogs, and social media posts. In addition to supplier websites that showcase specific solutions, there are likely to be online sources (ranging from the self-serving to the unbiased) to help buyers learn and compare solution alternatives. Buyers
One of the big challenges for the people leading global sales organizations is figuring out the right way to set pay for for salespeople who work in vastly different countries and markets.
Some argue that having a single global plan for each sales role (e.g. the same pay mix, metrics, plan type, and payout curve in every country) is beneficial: “A global plan aligns with the needs of global customers and creates uniformly effective and fair compensation. It provides control over sales incentive spending around the world, and it simplifies plan management and administration.”
Others argue that a single global incentive plan per sales role doesn’t work: “Sales is a local function. Each country has its own market dynamics, business culture, laws, and availability of data for measuring performance. Diversity makes a global sales incentive plan impractical and dangerous.”
When it comes to globalizing sales incentive