This is not a trick question: Who Does the Sales Rep Actually Report To - VP of Sales or the Customer? The answer isn't as easy you'd expect.
All your life you've heard that the customer is always right, correct? Authors Erin Anderson and Vincent Onyemah explore this idea in their article, How Right Should the Customer Be?
The authors write that every one of your salespeople would probably tell you the customer is king. That's usually a good thing, they say. In their words,
"The problems come when your salespeople aren't quite sure who their boss is. Their confusion could be a sign that your company's sales force controls - the various policies and practices that define the way you manage your sales team - are in conflict with one another."
In their research, the authors have concluded that this invariably causes problems in sales functions. And, as salespeople struggle to resolve or work around conflicts,
"the consequences mount - first affecting individuals, then spreading to the entire sales force, and eventually hobbling the whole organization...the sales force begins losing its best people...and turnover rates soar."
Sounds pretty serious, right? Have you seen this in your sales experience?
In Anderson and Onyemah's research, they found two systems wherein
"the poliies and practices that make up each component can be placed somewhere on a continuum between systems that encourage sales reps to put the customer first - what we call outcome control (OC) systems - and those that get them to put the district or regional manager first - what we call behavior control (BC) systems. Companies that rely on OC systems focus on getting salespeople to deliver certain kinds of results and are essentially indifferent to how those results are obtained. By contrast, firms that rely on BC systems value how people make sales more than the number of sales they make."
Here's more on the two systems:
Outcome control systems (OC):
- the customer is king
- salespeople measure and reward results. Companies tend to emphasize and track only a few of these results.
- Salespeople enjoy autonomy and are expected to use it
- salespeople seen as entrepreneurs
- focus more on pleasing customers than managers
- competitive culture
Behavior control systems (BC):
- manager is king
- management measures what salespeople actually do (effort, activities, hours, expenses)
- also measures what salespeople are (appearance, education, age)
- rely on often subjective performance criteria
- care about tangible, visible acknowledgements
- motivation rests on feelings of achievement, personal growth, and self-worth rather than numbers
Of course, the two control systems are at extremes, and many companiies function quite well somewhere in the middle, where the power of the manager and the power of the customer are in some sort of balance. Indeed, this is where most sales forces should be. Few firms should be turning over wholesales control of their salespeople to just the customer or just the sales manager.
Maintaining the balance, of course, is difficult and those in sales need to watch the system scale, in order to keep it from tipping either way. Why is maintaining the balance difficult? It's difficult because people have a natural tendency to work toward the extreme that suits them. Aim for a balance between the two systems and work for it!
1. Phoning for the Right Reason
In Keith Worboys article, Worboy talks about his experience when he gets pitched on the phone.
No proper introduction, no explanation of what the call is about before engaging in a bucket load of spiel. No "How are you today?" or "This is what we do, would it be of interest?"
Because of how often the author gets pitched to terribly, he asks the caller how sales are going.
Despite all of the freely available information on and off-line to the contrary, it seems people are still after a quick or instant sale with zero social output.
The telephone is the greatest resource for making first contact. But you have to aim to provide value and consideration of your prospects requirements. "Take the time to say hello and ascertain now is a good time for a 2 minute chat. Ask how their day is going and relate to it in some way. Indroduce yourself and the name of your company and ask if they're familiar with your services. If yes, what do they know? If not, give a quick outline and testimonial of similar businesses and clients that have benefitted."
If an exciting sports event is happening, that's always a good way to break the ice and start casual conversation. Also keep in mind to listen to their tone. Are they showing interest? Are they already using similar services and could they be improved in some way?
Never forget that you are there to provide value, if commissions earned are forefront in your thoughts, your mind is in the wrong place.
In Kelsey Meyer's article, Meyer talks about how too often, content is only seen as a marketing strategy, and because of this, companies miss out on the advantages it offers sales teams.
Content is perfect for generating leads and closing the sales loop.
But remember, not all content is created equal. Staying organized with an editorial calendar is helpful.
The different types of content you should develop and support your salespeople are:
- Content that attracts qualified leads. "Once readers have read an article in an external publication and clicked through to your blog, they are engaged. At this point, you have a prime opportunity to provide gated content such as an e-book, whitepaper, or template."
- Content that educated throughout the sales cycle. Leads are everywhere, but the issue is educating leads. Use your content to answer common questions and help people out.
Content can bring many customers and audience. Do it right.
In this article by Andris A. Zoltners, PK Sinha, and Sally E. Lorimer, the authors say that most sales forces pay a commission on the revenues salespeople generate or they give a bonus for achieving a territory sales quota. "This proven "pay for performance" approach motivates salespeople to work hard and drive sales results."
But today, companies increasingly expect salespeople to deliver not just sales but profitable sales growth. Logically, it follows that a sales force can align salespeople's effort with company profitability goals by linking incentives to profit, rather than sales metrics.
To help us determine whether paying salespeople on profitability is something you should consider, ask these two questions:
- Is profitability strategic? Consider paying salespeople for profitability only if profitability is a strategic goal.
- Is profitability controllable by salespeople? Salespeople who sell a single product at a set price have no impact on the gross margin of sales; the way they increase profits is by selling more volume. Thus, there is nothing to be gained by paying on profitability; the result will be the same as paying on sales.
After asking those two questions, you should be able to gauge whether paying on profitability is strategic and smart. If it is, then here are four additional questions that can help determine the best approach for using incentives to encourage more profitable selling.
- Can you measure gross margin at the territory level?
- Do you want to share profitability data with salespeople?
- Do salespeople influence price?
- Do you want to drive sales of higher margin products?
Sales incentive compensation plans can play a key role in aligning sales force effort with company strategies. When profitability is a strategic objective and is also within salespeople's control, a sales incentive plan that rewards salespeople for profitable selling can be an effective way to motivate achievement of company financial goals.
In Scott Francis' article, Francis says that "there is no one size fits all when determining how a prospect or customer might value your product or service." Here are seven questions that when asked will help determine how your product or service is perceived:
- How determined are your prospects to find out what your selling price is?
- Is the prospect acknowleding that your offering has benefits that they didn't know about or had not seen before?
- Do you come across as a strong believer with confidence in your product?
- Are you dealing with the decision makers?
- Know the relative fit of your offering as it relates to their concept of money?
- What is their timeline for making a buying decision?
- What are several of the customer's critical needs?
These questions will be very helpful in gauging the interest of the prospect. They can even help you decide when is the best time to ask the prospect if they'll close a deal.