The result is that selling has changed from simply hitting targets. The pressure is on to become the preferred supplier by knowing the customer's business and proving that you offer added value. The focus for managing salesforces has become the collaborative and sustainable customer relationship.
As part of an international programme of studies into sales effectiveness, Cardiff Business School has investigated the hallmarks of truly effective sales organisations in the UK, with some surprising results. These new insights into the problems and achievements of sales managers and directors suggest a very different agenda for managing sales operations effectively.
Pinning down what effectiveness means has always been a problem. We took a very simple view: effective sales organisations are those which do better than their competitors in sales, market share, profitability and customer satisfaction, and which beat their own company objectives in each of these areas. The research was based on a 150-item questionnaire sent to nearly 150 companies.
The first point to make is that there was nothing marginal about the differences between the more and less effective sales operations - the differences were massive. It was also clear that the leaders were ahead on all the measures of effectiveness - they were not buying success in customer satisfaction at the expense of sales and profits. This is because customer satisfaction drives sales and profits, not the other way around.
The critical differences which marked out the most effective sales organisations from the rest were:
l their overwhelming focus on developing and fostering customer relationships;
l their efforts in managing the key drivers of salesforce performance;
l their salesforce compensation strategy;
l their ability to recruit and develop salespeople with several important success characteristics; and
l the critical role of the salesforce manager on the front line.
Together these hallmarks of the effective sales organisation lead to a substantially different agenda for recruitment and development in the salesforce, for managing selling efforts, and for achieving the customer relationships that lead to competitive advantage.
The focus on long-term customer relationships in the most effective sales organisations cuts across everything else that we found and underpins their dramatically superior results.
Salespeople in the effective sales organisation perform better in sales, margins, exceeding sales targets and objectives. Yet we found that traditional sales presentation skills and technical product and service knowledge were no different in the most effective sales organisations than in the rest. The critical drivers of superior salesforce performance were:
l adaptiveness in selling: flexibility in sales approaches, variation by customer and experimentation in selling methods;
l teamwork in selling: collaboration within the salesforce and with non- selling personnel elsewhere in the company, crossing organisational boundaries to meet customer requirements;
l sales planning: developing sales strategies around customers as well as effective day-to-day activity planning;
l sales support activities: providing customers with after-sales support, complaints-solving and troubleshooting on customer problems.
These findings establish some benchmarks for improving sales effectiveness, but importantly raise questions about traditional approaches to sales training and development activities, which stress negotiation and selling skills alone.
The most effective sales organisations were those that struck a balance between the motivational effect of incentive payments and the security provided by fixed salary payment. They pay fixed salaries amounting to 75 to 95 per cent of the total, with the remainder made up of bonus and incentive pay.
By basing a high portion of total pay on salary, sales management is in a better position to guide sales activities and priorities towards meeting customer needs. But by also having an opportunity for incentive payments, management encourages and rewards superior performance. However, the old-fashioned view that paying salespeople mainly by commission gets results does not hold true.
Salespeople in the most effective sales organisations also showed markedly different personal characteristics:
l motivation - particularly in terms of sense of personal achievement and enthusiasm, as well as their involvement and loyalty, creativity and imaginativeness at work;
l customer orientation - especially their clear focus on customer needs and adaptation of selling approach to individual customers;
l team orientation: co-operation and adaptiveness as team members;
l sales support orientation: substantial time spent planning, and performing non-selling tasks.
It is clear that the traditional emphasis on selling skills and on product knowledge is just not enough.
In the most effective sales organisations we found that the role of the sales manager was far more one of coach and commander, rather than the traditional commander and score-keeper. This is shown in the outstanding level of effort by sales managers in the most effective organisations in the following activities:
l monitoring sales people - by being in the field to observe sales performance and review progress;
l directing - in the sense of helping salespeople develop their potential, as well as making the effort to participate in coaching and training salespeople;
l evaluating salespeople - in terms of professional development and the quality of their work, as well as judging sales results;
l rewarding salespeople - by providing regular feedback on performance, and rewards (often non-financial) linked to important results (not just sales).
The effective sales manager participates in field activities and provides a role model that emphasises managing by helping salespeople to perform well.
These insights are important in how companies recruit, promote, develop and appraise sales managers - particularly in balancing the need for "people" skills and team-building skills with capabilities in sales techniques and product/service knowledge.
The are no "quick fixes". However, these new insights into the operation of the most effective sales organisations identify the factors that managers must address.
Successful sales training and development will have to emphasise team- building, conflict resolution, interpersonal skills and other capabilities that support the drivers of salesforce performance and develop the needed success characteristics. This will require time, effort and money. It is, nonetheless, the direction in which many firms will have to move to develop truly effective sales organisationsn
Nigel Piercy is professor of marketing and strategy at Cardiff Business School and David Cravens is professor of marketing at Texas Christian University.Reuse content