When a company launches a new product into a new market, the temptation is to ramp up sales force capacity immediately to gain customers as quickly as possible. But hiring a full sales force too early just causes the firm to burn through cash and fail to meet revenue expectations. Before it can sell an innovative product efficiently, the entire organization needs to learn how customers will acquire and use it, a process the authors call the sales learning curve: The company--marketing, sales, product support, and product development--and its customers transfer knowledge and experience back and forth. As customers adopt the product, the firm modifies both the offering and the processes associated with making and selling it. The more a company learns about the sales process, the more efficient it becomes at selling, and the higher the sales yield. As the sales yield increases, the sales learning process unfolds in three distinct phases--initiation, transition, and execution. Each phase requires a different size--and kind--of sales force and represents a different stage in a company's production, marketing, and sales strategies. Adjusting those strategies as the firm progresses along the sales learning curve allows managers to plan resource allocation more accurately, set appropriate expectations, avoid disastrous cash shortfalls, and reduce both the time and money required to turn a profit.
In recent years, sales leaders have had to devote considerable time and energy to establishing and maintaining disciplined processes. The thing is, many of them stop there--and they can't afford to, because the business environment has changed. Customers have gained power and gone global, channels have proliferated, more product companies are selling services, and many suppliers have begun providing a single point of contact for customers. Such changes require today's sales leaders to fill various new roles: company leader, customer champion, process guru, organization architect, and course corrector. Company leader: The best sales chiefs actively help formulate and execute company strategy, and they collaborate with all functions of the business to deliver value to customers. Customer champion: Customers want C-level relationships with suppliers to understand product strategy, look at offerings in advance, and participate in decisions made about future products--and sales leaders are in the best position to offer that kind of contact. Process guru: Although sales chiefs must look beyond the sales and customer processes they have honed over the past decade, they can't abandon them. The focus on process has become only more important as many organizations have begun bundling products and services to meet important customers' individual needs. Organization architect: Good sales leaders spend a lot of time evaluating and occasionally redesigning the sales organization's structure to ensure that it supports corporate strategy. Often, this involves finding the right balance between specialized and generalized sales roles. Course corrector: Sales leaders must watch the horizon, but they can't take their hands off the levers or forget about the dials. If they do, they might fail to respond when quick adjustments in priorities are needed.
Many companies today are faced with large, complex selling situations--they sell expensive equipment that affects many parts of a customer's company, they work on sales that may take several years to consummate, or they arrange mergers with other organizations. These major sales need special handling: They are more complex than smaller transactions, their potential profit is larger, and they have a more lasting effect on both buyer and seller. In this article, first published in 1976, the authors develop a systematic approach that companies can use not only to facilitate the sale but also to ensure the long-term account relationship. Their eight-step procedure shows how to open a contact, "separate the suspects from the prospects," develop a profile of a company's needs and key personnel, justify the purchase to the buyer, make the sales pitch, coordinate company resources, close the sale, and maintain the account. Before they can engage in strategic selling, most companies will have to revise the makeup of their sales forces according to the kind of sales they want to make, which may include different types of nonrecurring sales. To help solve these more complicated selling problems, the authors provide organizational guidelines for companies to use in their specific operations. Among these are creating a senior sales force to service a multitude of major accounts, assigning a field sales manager to one or two accounts for regional sales management, and having top executives take charge of the large sales.
Traditional, high-pressure selling techniques were intended to talk the buyer into making a purchase--which often meant driving him to a decision rather than allowing him to reach it freely and independently. In this classic article from 1947, HBR editor Edward C. Bursk makes the case for replacing high-pressure selling with a milder approach, in which the salesperson does not so much "sell" the prospect as let him follow his natural inclinations to buy. Bursk draws from his own business experience to support his points. He begins with a discussion of the advantages of low-pressure selling, the heart of which is the seller's sincerity. He then analyzes the reasons for the method's effectiveness. It's most clearly demonstrated by the customer-problem approach, in which the salesperson learns about the buyer's problems and, in effect, helps him solve them. Bursk concludes by addressing the practical questions facing sales managers, who bear the brunt of implementing the new technique. Low-pressure selling requires salespeople who are intelligent, analytical, subtle, and flexible--qualities rarely found in practitioners of the high-pressure selling method. Managers must not only craft a compensation plan that balances stability of income with strong incentives, but select and train low-pressure salespeople with care.
Despite millions of dollars spent on combating the high turnover rate among insurance agents, the rate--approximately 50% within the first year and 80% within the first three years--had remained steady for the more than 35 years preceding the publication of David Mayer and Herbert M. Greenberg's 1964 article. The authors devoted seven years of research to studying the problem of the ineffectiveness of large numbers of salespeople. They discovered flaws in the established methods of selection and revealed the two basic qualities that any good salesperson must have: empathy and ego drive. Empathy, in this context, is the central ability to feel as other people do to sell them a product or service; a buyer who senses a salesperson's empathy will provide him with valuable feedback, which will in turn facilitate the sale. The authors define the second of the two qualities, ego drive, as the personal desire and need to make the sale--not because of the money to be gained but because the salesperson feels he has to. For sales reps with strong ego drives, every sale is a conquest that dramatically improves their self-perception. In the dynamic relationship between empathy and ego drive, each must work to reinforce the other. Why did the executives that Mayer and Greenberg studied continue to hire salespeople who did not have the ability to perform well? The companies were hindered in the preselection process by flaws in the prevailing forms of aptitude testing. Test takers could easily give answers they knew the test givers wanted to hear, in part because the tests sought to identify particular psychological traits rather than the personality type most capable of selling.
When is a buyer not really a buyer? How can the best product at the lowest price turn off buyers? Are there anonymous leaders who make the actual buying decisions? As these questions suggest, the reality of buying and selling is often not what it seems. What's more, salespeople often overlook the psychological and emotional factors that figure strongly in buying and selling. By failing to observe these less tangible aspects of selling, a vendor can lose sales without understanding why. In this article, first published in 1982, Thomas V. Bonoma sets up a procedure for analyzing buying decisions and tells sellers how to apply the resulting framework to specific situations. Steps in the procedure include the following. First, identify the actual decision makers. Though it may come as a surprise, power does not correlate perfectly with organizational rank. The author outlines five bases of power and offers six behavioral clues for identifying the real decision makers. Second, determine how buyers view their self-interest. All buyers act selfishly, but they sometimes miscalculate. As a result, diagnosing motivation is one of the most difficult management tasks to do accurately. The author suggests several techniques to determine how buyers choose their own self-interest. Third, gather and apply psychological intelligence. There is no formula for placing sound psychological analyses magically in the sales staff's hands. However, the author offers three guidelines--make sure that sales calls are highly productive and informative, listen to the sales force, and reward rigorous fact gathering, analysis, and execution--to help managers increase sales effectiveness.
Fusilier Technology is in disarray. Its vice-president of sales is leaving, the company's new growth strategy to sell customized business solutions has stalled, and sales have been flat for five years. Bill MacLeod, Fusilier's CEO, has to choose between two very different candidates for the top sales job: a veteran sales director who has excelled under the old order and a brash outsider who has experience selling solutions but doesn't know the industry. With an outside board director pressuring him to accelerate the pace of change, MacLeod ponders which candidate can best help the company make the transition. Fusilier's new solutions strategy has made the decision that much more difficult. Under this model, the company must revamp its incentives, training, and processes for deploying the sales force. Historically, compensation has been based largely on an individual rep's results, and sales training has focused on product features and cost-performance advantages, not on the business issues facing customers. Now salespeople need to understand, promote, and select from an entire portfolio of products and services offered both by Fusilier and its business partners. What's more, they need to collaborate with Professional Services, the new consulting unit whose mission is to jump-start the solutions-centric approach. Whom should MacLeod hire for the top sales job, and what should he do to put Fusilier back on a growth track? In R0607A and R0607Z, four experts comment on this fictional case study: Alston Gardner, founder of OnTarget, a sales training and consulting firm; Steve Kerr, a managing director and the chief learning officer of Goldman Sachs; Randall D. Kelley, a partner of the executive search firm Spencer Stuart; and Andrea L. Dixon, an associate professor of marketing at the University of Cincinnati.
Fusilier Technology is in disarray. Its vice-president of sales is leaving, the company's new growth strategy to sell customized business solutions has stalled, and sales have been flat for five years. Bill MacLeod, Fusilier's CEO, has to choose between two very different candidates for the top sales job: a veteran sales director who has excelled under the old order and a brash outsider who has experience selling solutions but doesn't know the industry. With an outside board director pressuring him to accelerate the pace of change, MacLeod ponders which candidate can best help the company make the transition. Fusilier's new solutions strategy has made the decision that much more difficult. Under this model, the company must revamp its incentives, training, and processes for deploying the sales force. Historically, compensation has been based largely on an individual rep's results, and sales training has focused on product features and cost-performance advantages, not on the business issues facing customers. Now salespeople need to understand, promote, and select from an entire portfolio of products and services offered both by Fusilier and its business partners. What's more, they need to collaborate with Professional Services, the new consulting unit whose mission is to jump-start the solutions-centric approach. Whom should MacLeod hire for the top sales job, and what should he do to put Fusilier back on a growth track? In R0607A and R0607Z, four experts comment on this fictional case study: Alston Gardner, founder of OnTarget, a sales training and consulting firm; Steve Kerr, a managing director and the chief learning officer of Goldman Sachs; Randall D. Kelley, a partner of the executive search firm Spencer Stuart; and Andrea L. Dixon, an associate professor of marketing at the University of Cincinnati.
Lay's was a second mover when it introduced its potato chips to rapidly evolving post-communist Hungary. By inserting cash into its potato chip bags, Lay's increased sales dramatically and permanently (i.e., also post-promotion). In contrast, after withdrawing a second "Money in the Bag" promotion, sales fell. Students prepare case A (5 pages) at home. Three in-class cases and a teaching note provide analysis and managerial implications.
This case shows how Fiona Jenkins, Head of Physiotherapy for South Devon Health Services, reviewed and redesigned the stroke service care pathway. She had just four months to present a proposal and then implement it in accordance with the National Service Framework (NSF) guidelines. These guidelines specified that a stroke specialist should examine all individuals admitted with a diagnosis of stroke. Her challenge was to coordinate the different stakeholders - primary care, secondary care and social services. In addition, she had to do this without any additional funding. The case describes the different options open to her and how she decides on a plan. Some of the players are suspicious, and even threaten to resign if the plan is implemented.
This case shows how Fiona Jenkins, Head of Physiotherapy for South Devon Health Services, reviewed and redesigned the stroke service care pathway. She had just four months to present a proposal and then implement it in accordance with the National Service Framework (NSF) guidelines. These guidelines specified that a stroke specialist should examine all individuals admitted with a diagnosis of stroke. Her challenge was to coordinate the different stakeholders - primary care, secondary care and social services. In addition, she had to do this without any additional funding. The case describes the different options open to her and how she decides on a plan. Some of the players are suspicious, and even threaten to resign if the plan is implemented.
Deborah Jamieson, Advanced Practitioner at the University College London Hospital (UCLH) National Health Service (NHS) Trust, had been employed to set up nurse-led pre-admissions clinics within the Trust and to improve the existing day surgery clinics. The case describes how she manages to recruit and train nurses to run these clinics. She draws on her experience in the US to encourage the nursing staff to take on more clinical responsibilities. The case examines how nurses' roles are developing within the NHS as they take on more tasks that have traditionally been the responsibility of doctors and consultants (attending physicians). The case describes how Jamieson changes the mindset of the key players (managers, consultants and anaesthetists), and how she implements the pre-assessment clinics and improves the existing day surgery pre-admission process. Patient satisfaction is increased and fewer operations are cancelled, thus reducing costs for the Trust.
This case examines how Martin McShane, a general practitioner and physician manager at the Moss Valley Medical Centre, changes the mindset of all the key players involved in caring for the elderly and implements a proactive, prevention-oriented care model. McShane is up against all the different elements of the NHS - primary care, social services and acute care. Through skilful management of the various players, he succeeds in smoothly integrating new systems throughout the region. A nurse-led service for tracking hospital admission and discharge of elderly patients is introduced, with systems implemented to improve continuing care of patients and communication between services that ultimately reduce hospital stays and admission rates.
NICE (National Institute for Health and Clinical Excellence) reviews the cost effectiveness of medicines for the treatment of multiple sclerosis (annual cost per patient 10,000-18,000) and does not authorize their use within the UK National Health Service. However, an agreement between the manufacturers and the Department of Health is reached on an innovative risk sharing scheme.
Vendors that match specific sales capabilities to opportunities and provide thoughtful support can maximize their return over the long term. Those that use a four-pronged portfolio approach are likely to do better than their peers.
Sales force automation (SFA) applications have great potential to enhance companies' sales processes. Yet, many reps strongly resist SFA implementation. Five recommendations can help smooth the integration.
From poor listening skills to the failure to follow up, salespeople offend potential customers in a variety of ways. Here's a chance for reps to take note of--and correct--the errors of their ways.
According to a recent survey, top executives are consistently underwhelmed by their companies' sales forces. What can executives do to improve their sales functions? Strive for a full spectrum of excellence.
People remember the salesman, but rarely is the sales manager recognized in the history books. Still, some old-time sales leadership techniques may hold the key to present-day success.