Technology. Globalization. Specialization. Speed.
We see predictions about their effect on business practically every day. But while the concerns of the “CEO of the future” are often discussed and debated, what about sales? What will the sales leaders of the future need to do to compete effectively?
To explore this question, Chally Group Worldwide co-founder and Chairman Howard P. Stevens sat down recently with some of the most eminent practitioners and thinkers in the business: Neil Rackham, renowned speaker and author on sales, Andy Zoltners, Co-founder of ZS Associates and Frederic Esser Nemmers Distinguished Professor Emeritus of Marketing at the Kellogg School of Management at Northwestern University. As part of an ongoing conversation about the future of sales leadership, Stevens asked them what sales leaders can expect in years to come, and how they can prepare.
Education vs. Training
This begs the question of how the salesperson of the future can consistently perform in this new role as a trusted advisor. Rackham sees an increased focus on education. Rather than giving a lot of specialized training to generalist, sell-me-this-pencil candidates, he foresees recruiting people who have the specific education and knowledge to deliver a higher level of expertise. “We’re not looking for an MBA in sales, but rather for the kinds of things that go into an MBA.”
Does this shift mean that salespeople will become management consultants? Perhaps. But, according to Rackham, the leadership role in high-level selling teams might call for someone who finds and delivers the appropriate expertise, rather than having it themselves.
As he explains, “a big eye-opener for me in some recent research we did was that the best account managers weren’t the ones who spend the most time out talking with the customers. The top players spend nearly all their time working internally. Why? Because by focusing on the way the company serves the customer, managing the relationship between the two companies, they could create more value.”
Sales or Consulting?
Psychometric evidence tells a similar story. Chally Group research shows that many of the characteristics that are most predictive of high-level success in sales overlap strongly with those that predict the best senior managers. In practice, says Stevens, “Whatever their job description may say, top salespeople succeed by taking on more of an internal management role. They manage the resources in their company, orchestrating them to meet the needs of a particular customer.”
He points to additional research by Arun Sharma, Professor of Marketing at the School of Business Administration at the University of Miami, indicating that the top 20% of a sales force consumed 52% of the company’s total resources. This supports the idea that even today, success in sales leadership “takes people who know how to manipulate processes within the company to the advantage of their customers.”
On the other hand, the same study showed that the top 20% of performers brought in 54% of the business – considerably less than what the “80/20 rule” of conventional wisdom would predict. So the standouts fail to significantly outperform average in terms of earning a return on the resources they spend.
As Rackham puts it, “over-resourcing the best opportunities may be the most successful of all sales strategies today. But it’s often simply the most senior people who shout the loudest who can allocate those resources.”
He believes that opportunity management will have to be a much greater focus in the future. “In a world in which it costs IBM half a million dollars in global services just to bid on a major piece of work, this kind of informal approach isn’t sustainable. Organizations are going to need much more rational decision processes.”
Managing Through Compensation – or Through Management?
If the sales leaders of the future look more like specialized business consultants, professional managers, or both, will they still be compensated largely by commission?
Zoltners believes that this bias may be inevitable. “You could change to another system tomorrow, but of course you’d want to retain and motivate the best people. So then the high performers would get more money anyway through bonuses and the like, and your system would get broken. I think the decisions companies make usually are manifestations of their culture and their beliefs, and sales compensation is deeply ingrained in those. It takes an unusually strong company to overcome the status quo.”
Rackham reluctantly agrees. “If you try to manage by compensation you’re probably not managing by management. The best system to me would be a bonus system where the incentive and focus came from the culture and the management of the company. But I think we may have no choice but to have a high level of incentive compensation.”
Making Sense of Customer Value
Of course, not all sales efforts will depend on high-level professional expertise. Enabled by online technologies, the experts believe that more transactional sales will continue to migrate away from face-to-face selling. As the extremes of the spectrum grow farther apart, customer segmentation will become more critical, and more complex.
Rackham frames the divergence in terms of value, “If you look at customer value, there will always be two components: the cost and the benefits. You can create benefits by increasing the expertise that you give them. Or you can decrease the cost for the more transactional customer. The interesting thing is, customers are neither entirely one nor the other. It will depend on the opportunity.”
So will we see companies actually developing two or more different sales forces? He thinks so. “I’ve always disliked the hunter/farmer model. I don’t think that is going to predominate in the future. I agree that we need something more subtle than that. The evidence seems to show that the successful company has got to be able to use multiple models and target them appropriately.”
Given all these issues and trends, what two things are most likely to change in the near future?
The hardest changes may be in the area of structure. How can companies segment their sales expertise in a way that is both efficient for the organization and meaningful for customers? Specialization gets very complicated, says Zoltners. “You’ve got big accounts, little accounts, U.S. accounts, and global ones. Whatever structure you begin with needs to be extensively customized, and flexible enough to adapt to changes.”
The other major evolution will be technology. Zoltners believes that innovation in the ways salespeople can touch customers, such as tele-presence technologies, social networks, data analytics, and outsourcing, are just getting started. “Even today, inside sales jobs are growing three times faster than outside sales thanks to technology,” adds Stevens. “According to Salesforce.com CEO Marc Benioff, inside salespeople are getting higher close rates than traditional teams, in a third of the time and at a third of the cost.”
Importantly, many of these advantages work in both directions. Technology adds flexibility and convenience to the sales process for customers. And those who have a fairly clear idea of what they want can go and find it. Zoltners points to recent SSC research showing that before the first discussion with the sales person even happens, many customers have already made a first-stage decision.
The End of Sales As We Know It?
If these trends continue, what does the future look like for the salesperson? Rackham predicts that the number of face-to-face salespeople will fall, but the demands on them in terms of job complexity will rise. “That’s going to mean a different kind of person, a different skill set, and different kinds of autonomy, supported by an organizational structure that’s both more rational and more flexible.”
Regardless of what insights, skills, and resources the salesperson of the future may need to bring to the table, Rackham is confident that personal interaction will continue to be a critical part of the process. “At the end of the day, we’re still talking about human beings making important decisions. Sometimes buyers just need your reassurance that a particular product is going to fit their needs at a particular cost. Sales, as we know it, will not just go away. I think we’ll all still have jobs.”