October 23, 2017


















REINVENTING FIELD SALESFORCE PRODUCTIVITY

Basic business trends have been working against both the large quantity and average quality of field salespeople in the U.S. The diagram below illustrates cost, productivity, perceived value, and "service dis-intermediation" trends for field sales:

 

 

 

 

 

 

 

 

 

 

To understand the diagram, start with the rising cost line (#1). To attract and keep quality salespeople, the marketplace tells us that we must raise pay with inflation and then some. Other related costs of social security, health benefits, travel expenses, auto insurance, etc. are also rising faster than general inflation.

The productivity (#2) of traditional sales activity has stayed flat. Salespeople don't drive, park, wait, or talk any faster than they did 20 years ago. We must look for ways to maximize face-to-face time, and then improve the value and potential economic leverage of that time.

The perceived value (#3) of salespeople to "large industrial buyers" is dropping. Buyers claim that: there are more salespeople calling than ever; that they don't have time to see them; and less than 10% are worth seeing. In another survey of a variety of distribution company customers, the importance of the outside salesperson to the customer had dropped from the #1 reason to buy in 1970 to the #8 reason in 1990.

What the buyer or any human being claims they do is different, however, from what they actually do. Good salespeople can still make things happen, but why the significant drop in perceived value?

Perhaps some of the services that salespeople have traditionally provided have been usurped or have eroded in value. Educating customers about new products, for example, is a service that has eroded. New products are either: not new, but micro-segmented, knock-off or improved versions of existing products; or, there are too many trade magazines, trade shows, targeted database mailing systems, etc. which can beat the salesperson to the customer. The instantly over-informed buyer doesn't need to hear old, general news from a salesperson. But, they might need to hear in-depth specifics and custom design possibilities for specific applications, which most salespeople don't know - which is an opportunity.

Buyers also no longer need salespeople to place orders or provide general information. Why wait in a need-it-now world for someone to arrive when we can dial an 800# to talk to an inside sales person with all of the answers. 800#s, computer databases, fax machines, and express mail/shipment have taken value away from the outside salesperson and given it to the inside and out-calling telemarketers.

An increasing percent of what buyers buy are equally excellent commodities that are readily available from too many suppliers unless government protection creates false shortages. Buyers are not loyal to salespeople and pay book price to insure future availability as they did through 1974.

Face-to-face psychological stroking is still a viable field sales service, but the cost has gotten to high for this service alone. This cost-value gap is labeled "service disintermediation (#4)" in the diagram above. This term happens when we, for example, choose to pump our own gas instead of using full-service. The station is giving us the pump-jockey's cost in the form of a lower price.

Some firms are experimenting with unbundling the salesperson or going to cost-plus pricing. This allows the customer to self-customize what services they want to pay for including or excluding a salesperson. Usually, however, the customer just leaves for other suppliers who have stripped out some or all of the services. Consumers in growing numbers, for example, have left full-service retailers for mail-order, category killer, and warehouse club suppliers.

A good business reality check occurs by applying two rules:

Find customer needs and fill them. "You would like a salesperson to call on you (or some other service)? No problem, we will do it."

But, fill the need at a cost that is less than what the customer will value and pay for it in order to make a profit. "This salesperson will cost us $x for every hour of face-to-face time, so we will charge 1.2x which will be bundled into the price of the goods we are selling."

If the customer thinks that 1.2x is a fair incremental price to pay, great. If not, they may take the salesperson's value, and then buy the goods or similar goods from some other supplier with an 800#. This stripping of services and shopping the price is the customer's way of saying that we are not observing rule #2 above. There are plenty of unviable needs to fill, because the customer wants something at a price that is less than what they will pay.

SOLUTION GUIDELINES

Make decisions in the context of what the customer wants whenever possible. The perceived value of salespeople is dropping, but buyers value seeing 10% of their callers, so there is demand for the right type of salesperson. We, therefore, must hire the best. We will have to pay more to get fewer, better quality salespeople and then expect more customer impact and volume from them.

To justify higher compensation and training costs, these stars will only be able to service largest, "A" accounts regularly to keep the expense-to-revenue ratio in line. Simplistically, we can service "B" accounts with telemarketing, and "C" accounts with direct mail and catalogs. It would be best, however, if we could use a blend of marketing methods for all accounts. For example: direct mail can generate leads; telemarketing can qualify them and allocate them to a main mode of selling; but, if a B or C account needs a salesperson occasionally one could visit. Even detail specialists can be situationally scheduled.

Our superior salespeople could increase face-to-face time and value by:

Calling less frequently, but staying longer to convert drive-time to face-time. Some customers will need to be psychologically reprogrammed. It is like telling them that instead of one cup of coffee every day we will give them 2+ every other day.

An agenda helps to pack more value in during a meeting, and a visit with multiple buying influences simultaneously instead of one at a time increases sales productivity.

Instead of taking orders and pushing products, which can be switched to inside sales, telemarketers and direct mail, our salesforce needs to solve new problems. For product solutions, they need general knowledge for all offerings with total expertise in one to a few areas. The assumptions are that: sales generalists may not be able to stay current with all in-house and competitive offerings; but a team of experts with pagers and mobile phones can solve any customer's problem much like a large law firm of specialists does for its clients.

Our salespeople should also look for general business problems and solve those with consulting solutions. Most likely solutions will be to design lowest total procurement cost purchasing systems for a customer's repeat purchases. The systems should eventually cross company boundaries seamlessly and electronically. Next most likely solutions might be to help buying influences do their jobs better. These individual value-added initiatives should help to insure getting last look in competitive situations- plus, some extra markup consideration for at least the salesperson's effort. And, with smaller commercial accounts, salespeople may be consulting specialists. Enlightened self-interest and co-destiny suggest that if a customer, for whom we are the majority supplier, doesn't grow profitably, then we can't either.

CONCLUSIONS

We cannot go to market in one standard way any longer. In 1980 IBM sold all of their products through field salespeople, today they have 15+ different channels and selling modes. If we don't experiment with alternate and hybrid blends of marketing methods while downsizing and upgrading our field salesforce, then we will be: cost inefficient; providing some mediocre salespeople that aren't appreciated; fielding others that are stripped and shopped; and losing volume to alternate type selling organizations. We must reinvent and reallocate the face-to-face value of the field salesforce to stay in tune with the changing times.

Ó Merrifield Consulting Group, Inc., Article # 4.5