The traditional model of sales no longer works.
Salespeople find that they spend:
- Too much time doing customer service and account administration work.
- Not enough time in meaningful sales interactions that lead to additional business with current and new customers.
- Too much time working with production and finance on non-standard orders.
How did we get here? Those traveling salesmen that traveled by rail after the Civil War were well-suited to a model where the salesperson functioned as an autonomous agent. This remained true throughout much of the twentieth century.
Justin Roff-Marsh explains that gradually two things changed. Production ceased to improve as rapidly. And companies shifted more of their work to build-to-order.
The Rate of Product Innovation Slows
Throughout the 19th and 20th century we experienced an astounding rate of invention and production improvement. Companies continuously invented whole categories of technology and product. Roff-Marsh explains that the primary role of the salesperson was to “take a highly differentiated product and demonstrate it to potential customers.” Salesmanship counted, but most of the value was contributed by new product development and production.
Today that pace of innovation has slowed. Markets have become more competitive as product differentiation has declined. It’s no longer enough for the demand-creation side of the house to demonstrate a product and display a little salesmanship. Companies cannot afford to have their salespeople spending most of their time on customer support and administration issues.
As the pace of product innovation slows, sales has been revealed as the constraint in the system. The model of salesperson as autonomous agent no longer works in this environment.
Companies Shift from Build-to-Inventory to Build-to-Order
The second pattern in industry has been the way it organized its value chain. Historically companies forecast their production needs and built to stock.
Salespeople then sold product from the stock of inventory. This value chain made it possible to deliver orders quickly to a customer. The clean separation between production and sales also made it feasible for salespeople to operate as autonomous agents.
As production has become more flexible and as communication between seller and buyer has improved, more companies have shifted from build-to-stock and have moved to build-to-order production. This method reduces their inventory holding costs and gives the customer more choice in their purchase.
For salespeople though, the world has gotten more complicated. As Roff-Marsh explains, “it no longer makes sense for the salesperson to simply sell as much as possible; the salesperson needs to sell only what production has the capacity to produce.” Now salespeople must stay in close contact with production and its capacity constraints.
To further complicate matters, many products and services are engineered-to-order. Salespeople work closely with production to design a specific solution for the customer.
Both of these trends have reduced the autonomy of salespeople. These changes in the production and sales environment force us to challenge the long-held assumption that “sales should be the sole responsibility of autonomous agents.”