Most sales organizations report that they are underperforming. It’s not that sales is getting worse, it’s that other functions in the company like production and new product development have gotten so much better. Decade after decade, these functions continue to show dramatic productivity gains.
In this article we’ll look at why sales organizations underperform and where they can look to improve their performance.
Let’s start by making one thing clear. Sales managers work hard each year to improve the performance of their team. Unfortunately, their efforts only address symptoms on the surface.
Michael Webb calls these the “usual fixes” and says they include:
- Replacing the sales manager or salespeople
- Trying a new type of sales training
- Launching a new lead-generation program in marketing
- Installing or upgrading customer relationship management (CRM) or sales force automation (SFA) software
- Changing the incentive plan or holding a sales contest
- Reassigning accounts or redrawing sales territories
- Hiring a new ad agency to tweak the brand image
Webb explains that the usual fixes fail to fix sales underperformance because they don’t identify and address the underlying problems.
And what are the underlying problems?
According to Justin Roff-Marsh, most sales organizations endure this primary underlying problem: salespeople don’t spend enough time selling. They simply don’t engage in enough meaningful sales conversations each week.
How could they? Even though the number of meaningful sales conversations that a salesperson conducts is the best indicator of sales performance, salespeople are saddled with a host of other tasks each day. Not only must they schedule meaningful sales conversations, they must also complete administrative and customer service activities, solution design, proposal development, and prospecting.
Why are salespeople saddled with so many tasks in addition to selling? Because we have asked them to act as autonomous agents. As agents, they do everything. Their job tasks include not only selling, but also all the other tasks associated with the sales function.
This organizational structure makes sense only if we look at the history of industry. Most companies in the past had a simple value chain. They produced a stockpile of inventory and salespeople sold from this stockpile. Products were standardized so salespeople could fulfill orders immediately.
As salespeople visited customers in their territory they had nearly complete autonomy over their work.They were far away from company headquarters and communication was difficult. Consequently, they were given full responsibility to visit customers, answer product questions, take orders, and solve customer service issues.
However, the days of simple value chains and make-to-stock business models are gone. Instead of make-to-stock, most engineering and technical companies have adopted make-to-order or engineer-to-order business models.
This shift in business models has caused significant changes in both the responsibilities and the behavior of salespeople.
Make-to-order and engineer-to-order business models make it more difficult for salespeople to act autonomously because they must interact more often and more directly with the production and engineering functions.
Dramatically improved communication makes it possible for salespeople to interact closely with production and engineering. Improved communication also reduces the requirement for salespeople to be geographically near their customers.
And finally, companies with a make-to-order or engineer-to-order business model must form relationships with potential customers well before they make their first sale. They must educate and build trust with customers, activities that are best conducted by a centralized function like marketing or sales, not a salesperson in the field.
All these changes lead inexorably to an unavoidable conclusion. It’s time to challenge the assumption that autonomous sales agents should bear the primary responsibility of sales performance. This assumption, more than any other cause, is leading to significant underperformance in sales.
If we look at the production and engineering functions, we see that they challenged this assumption long ago. In the nineteenth and early twentieth century, production organizations across many industries shifted from craft work to highly organized manufacturing teams. Engineering and product development organizations also shifted away from individual craft work to the work of teams.
Sales organizations are the last holdout to make the shift away from autonomous agents to coordinated teams. If they want to seriously address their underperformance, this is the direction in which they will move.