InSights - What you didn't know you didn't know

The Myths of Sales Management

The Myths of Sales Management

Following are popular misconceptions, or myths, about sales management (professionals) and the process of hiring them:

Myth: General management skills are sufficient.
Fact: Management positions are different enough that no one individual can fill all of them successfully. Running a business, for example, requires a variety of specialized skills that are quite different from those of running a sales organization.

Myth: Sales management failures result from the “Peter Principle.”
Fact: Eighty to ninety percent of management failure is due to a mismatch between the person and the position, rather than a manager upwardly climbing to his or her level of incompetence.

Myth: Great Sales Managers are born that way.
Fact: While some management skills, like intelligence, conceptual ability, leadership and charisma are probably based on genetics. Others, such as effective communicating and business acumen, can be acquired with practice and experience.

Myth: Anyone can be a great Sales Manager.
Fact: Basic management skills can be refined and improved by twenty to fifty percent, but no more. Thus, a poor decision-maker can become average, but is unlikely to ever be exceptional.

Myth: Job interviews can identify sales management potential.
Fact: The typical job interview increases the chances of choosing the best candidate by less than two percent. In other words, flipping a coin would be only two percent less reliable than basing your decision on an interview.

Myth: Similar-seeming individuals will succeed at similar jobs.
Fact: Duplicating success may seem like a good idea, but this is only possible through a comparison of large enough samples of top performers and weak per­formers to find the factors that consistently distinguish winners from “also rans.”

Myth: Sales Managers should be “jacks of all trades.”
Fact: While companies continue to demand that Sales Managers be able to play many roles, research reveals that the most critical factor for predicting success in any job is usually as important, or more important, than all other factors combined.

Myth: Personality is more important than job skills.
Fact: Many consultants and testing firms maintain that certain personality factors help en­sure management success. However, solid statistical research from many objective sources shows little correlation between any personality factor and any specific job.

Myth: Sales management failures don’t have a pattern.
Fact: Research consistently shows that people fail in a job due to factors different from the criteria used to select them. Companies that identify these “failure points” and build them into the selection process can reduce hiring mistakes by as much as 25 percent.

Myth: Reference checks aren’t essential.
Fact: Various recruiting and placement agencies report a fairly high percentage of false information presented in résumés and job applications. As many as 15 to 20 percent of job applicants try to hide some dark chapter in their lives.

Myth: All sales management is similar.
Fact: There are three general types of sales management: opportunity management, account management and territory management, all of which include call management as an integral part.

Myth: All sales organizations are measured similarly.
Fact: According to research conducted by Jason Jordan, there are several hundred different metrics that various sales organizations use to measure themselves.

To counteract these myths and come up with a more useful definition of sales management, it’s first necessary to apply some intellectual rigor to the subject of management in general. There are five generic types of managers in the modern corporation: Line Manager; Staff Manager; Profit Center Manager; Individual Contributor; Sales Force Manager.

Read more about the five generic types of managers in The Future of Selling book series, volume #9 The Sales Management of the Future.  http://chally.com/news-media/publications/

How the Internet Is Changing the Business Buyer

How the Internet Is Changing the Business Buyer

Historically, customers relied on sales reps to provide information and expertise about the products that the customer needed to purchase. As such, sales reps in a certain sense were in the information delivery business. The typical sales rep spent much of their time carrying product information from the company to the customer. Sales calls involved showing the latest brochure, delivering a product presentation, and explaining the benefits to the customer. This behavior was of value to the customer because the sales rep was presenting information that the customer needed in order to make a buying decision.

Over time, two factors led to a demand for a new class of salespeople – ones who worked for independent companies who produced no products them­selves, but specialized in selling other companies products. These became an alternative channel that vendors or suppliers could use to further penetrate their markets.

These independent sales companies provided either:

  1. A less expensive way to reach a specific geographic market or a market dedicated to a specific class of products. They created this “distribution” business by serving the products of multiple vendors (usually non-competitive) at a greatly reduced cost to each service supplier or manufacturer.
  2. Specialized technical sales “experts” who could include a supplier’s products in a more sophisticated solution that required multiple products (or services) in a specially designed application for a specific customer. They became known as value added resellers or VARs.

The Internet, however, has now made the historical sales methodology obso­lete and put both substantial additional pressure and opportunity on both distributors and VARs. Using the Internet, customers can get product information at the same time as the sales rep, not just about the sales rep’s offerings, but the offerings of all of the rep’s competitors. In this environment, product brochures and elaborate product pitches are meaningless because the customer already knows what to buy and can locate multiple places to buy it. As a result, the importance of the sales rep to the customer as a deliverer of information has waned, almost to the point of non-existence.

Similarly, the information on the Internet has vastly increased the ability of customers to negotiate their own price. In the past, the simple mechanics of gathering data on competitive products (and comparing relative prices) was a formidable job, requiring many man-hours on the part of the customer. Such work was productive only when the customer was comparing products that were nearly identical, and where the difference in price was large enough to justify the effort required to uncover that difference.

For example, a company purchasing a complicated computer system could easily justify writing an RFP, reading multiple vendor proposals, and finally selecting the right vendor because the difference in price (or, more precisely, total cost of ownership) between the two competing systems was likely to be far greater than the expense of the complex buying process.

However, in cases where the variation between the prices of two competing products was relatively small, customers were naturally reluctant to go through such an expensive process. Instead, they’d depend upon local sales reps to provide basic product information and trust them to provide the best price. Often these relationships were “locked down” with the purchasing department, thereby guaranteeing that certain amount of buying behavior would take place going forward.

The net effect of such relationship was to leave the power of setting prices to the selling firm and (by extension) the sales rep who represented the firm. As long as the price was not egregiously higher than what else was available, the customer would continue to buy from the “approved vendor” at the price set by that vendor.

Today, however, customers can instantaneously compare products online, both in terms of functionality and price. Suddenly, it’s become relatively inexpensive for customers to search for the lowest prices for many goods and services that they might require. This ability to easily and quickly find alternatives tends to drive prices downward because, all other things being equal, the customer can now purchase the lower-priced product without carrying a heavy financial burden of researching alternatives.

Customers, and the processes they use to buy, have changed in other ways as well. Op­portunities that were once within the purview of one, or perhaps two, decision-makers may now involve an entire committee. Complex sales that previously could have moved forward on the basis of general consensus among the buyer’s management team are today often subjected to increased levels of scrutiny and formal approval.

the-future-of-selling-product

Read more about selling in the Internet age, in The Future of Selling book series.

 

How to Match the Right Type of Salesperson to Your Customers

The most successful sales managers recognize that all good salespeople must have certain vital skills and motivations. The degree and type required, however, will vary according to what customers need in order to use the product or service. The best strategy is achieved by matching salesperson skills, focus, and motivation to best serve these needs. Market and customer analysis by Chally has identified four distinctly different types of customers. They, in turn, respond most positively to four different types of salespeople. (more…)

Why Sales Technology Projections are so Critical

Sales groups tend to be early adopters of new technology.  In some cases, like email and the smartphone, it’s been the salespeople themselves who have embraced the new technology.  In other cases, like Sales Force Automation (SFA) and Customer Relationship Management (CRM), the impetus for new technology has come from sales management. (more…)

Leveraging the Techniques of Moneyball to put a great Sales Force on the Field

Many times sports analogies are too frequently used as points of reference in general business and particularly within sales. However, the movie Moneyball is an exceptional example of how sports can teach businesses a lesson or two about effective talent management. (more…)

Nothing Happens Until Somebody Sells Something … Or Does it?

Next time you’re at a sales meeting, look at the salesperson to your left and then to your right … in 5 years one of the two won’t be in sales anymore. Of the approximately 1.9 million salespeople in this country, nearly half will be replaced by alternative channels between buyers and sellers. So predicts Neil Rackham, perhaps the world’s most preeminent sales researcher today.

(more…)

Always Be Closing… With the Right Competency Set

There has been a great deal of research and discussion in the field of Industrial/Organizational Psychology on the topic of broad versus narrow traits in predicting outcomes. (more…)

Does Spending A Lot To Duplicate Your “A” Players Work?

 

One of the favorite “Consultants” solutions to building sales force productivity goes like this: Study and identify the techniques of your “A” players, your superstars (the top 20%). Then, train the rest to use these winning techniques. They typically offer case studies and examples. So let’s test this sales myth with a little common sense and basic sales math. (more…)

Selling Successfully In The 21st Century

Research on customer satisfaction indicates that 80% of all vendor deserters rated their previous vendor as “good” to “very good.” However, customers who rated their vendor as “very good to excellent” were 42% more likely to remain loyal². (more…)

Beware Of The Evil Case Study

Business is “supposedly” all about ROI… (more…)