Rethinking Sales Management

A Strategic Guide for Practitioners

Beth Rogers

• Publisher: Wiley
• Year: 2011
• Print ISBN:
  9780470513057
• Edition: 1
• eBook ISBN:
  9781119995517
• Topic: Business
• Subtopic: Sales
• Index: Business

Until recently, sales managers received no specific training for their jobs. However, selling has become more complex with the emergence of regulations and more sophisticated customers. Sales managers need to inspire and achieve sales results by managing teams of professionals and other resources. To do so, they need guidance on dealing with issues that arise in these broader aspects of their role.

This concise guide for sales managers is based on a well-known sales management technique called the 'customer portfolio matrix'. Beth Rogers weaves her version of this throughout, enabling sales managers to see their strategy from the customer's point of view. Doing so will allow them to set realistic objectives, design new strategies that add real customer value, avoid wasting time on price-oriented customers and deploy resources for maximum results.

PART I

Strategy

For decades sales has been stuck in an operational silo. “Go out and get the numbers!” How bizarre. What is the top line on a Profit and Loss Account? Yes – sales. What happens to the bottom line without a top line? It goes negative.

Looking after the top line is what sorts the winners from the rest. Therefore a lot of companies are starting to manage the delivery of the top line strategically.

That’s good news for you as a sales manager. But if it is going to be good top-line strategy, you have to contribute to strategy formulation, not just implement it. That involves you in three issues:

1. You need to understand strategy in general.

2. You need to understand the strategic input of purchasing decision-makers in your customers.

3. You need to have your own strategic tool for analyzing business relationships.

1

The big picture

“When people talked about ‘Sales Strategy’ I used to laugh. As an oxymoron, even ‘Military Intelligence’ paled in comparison. In those days, ‘Sales Strategy’ was nothing more than simple tactics ruthlessly executed. But that was then. Today the wrong sales strategy sinks companies.”

Neil Rackham in Sales and Marketing Management, Spring 2000
Reproduced with kind permission from Professor Neil Rackham

The place of sales in business strategy

The role of marketing has been hotly debated over the years, whether it is strategic, tactical, or not even necessary. The role of sales is rarely questioned. Ever since Stone Age tribes traded pots for shells, selling has been necessary. Of course, you cannot have a seller without a buyer, but more of that later.

The evolution of business in the 20th century favored those with professional qualifications such as accountants, who frequently made the switch from money management to general management at Board level. Marketers too, armed with MBAs and compelling concepts like branding and segmentation, became more strategic and also jostled for a place on the Board. Not so sales. Most Sales VPs got on with selling, consoling themselves that the monetary rewards of selling provided a more attractive prize than power. Nevertheless, company politics did not go away. As soon as a quarterly target was missed, the sales force became the reason for the failure of the business strategy.

Can sales continue to sit on the strategic sidelines? In this era of customer orientation, it is more important than ever that sales managers should be involved in strategy-making, despite assertions from some business gurus that marketing is strategic and sales is operational. Who else but salespeople are close enough to understand the relevant decision-makers in the customer organization? If a company truly wants to align its strategy with customers’ strategies, it is no longer appropriate for salespeople to be the tactical, operational doers, whose feedback is filtered through layers of management and skepticism.

In this era of customer orientation, it is more important than ever that sales managers should be involved in strategy-making, despite assertions from some business gurus that marketing is strategic and sales is operational. Who else but salespeople are close enough to understand the relevant decision-makers in the customer organization?

Professor Nigel Piercy and Nikala Lane at Warwick Business School have identified ways in which the sales function contributes to strategy-making, and call it the five Is: – involvement, intelligence, integration, internal marketing and infrastructure development. We will discuss many of these functions in Part III, with a specific focus on infrastructure development in Chapter 12. At the moment, let’s just look at the big picture.

Intelligence is the easiest to discuss. Professional salespeople should be closely scrutinizing the customer and their business environment and applying their skills to selective supplier-customer relationship development. Some companies may assume that marketing does all that research, and for some categories of relationship, an aggregation of information about customer needs may be all that is necessary. But in business-to-business, many customers are large and complex, and the account manager’s understanding should be complete.

The account manager can identify opportunities for relationship development with certain customers, but operations have to deliver it. That’s where internal marketing is essential, but it also leads on to involvement and integration. If sales is not involved in strategic decisions at the same level as operations, what does that say about the status of the organization’s knowledge of the customer? Sales can only be integrated into the rest of the organization when it is represented at the highest decision-making level. Where else can sales explain what customers are doing, and how the organization can add value?

Selling has always been a “boundary-spanning” role – representing the company to the customer and representing the customer within the company. Companies cannot call themselves “customer-focused” unless they have that “voice of the customer” in the Boardroom. Is it just wishful thinking that sales should have a place at the Boardroom table? Not at all.

Selling has always been a “boundary-spanning” role – representing the company to the customer and representing the customer within the company.

We live in an era where a company’s top five customers frequently generate more than half of an organization’s revenue. These key customers have a significant impact on all parts of the business: they influence, or even decide, R&D priorities; and they affect every element of the business chain, from systems design to distribution. Increasingly, it makes no sense to have a Board on which the voice of these key customers is not represented. Marketing can represent the voice of the many anonymous customers who, in aggregation, are called “the marketplace”, but only sales has the closeness and depth needed to speak for these key customers who have such a profound effect on a company’s strategy and future.

Selling with strategic focus has implications for the way sales activity is organized. It also has implications for the knowledge that salespeople, account managers and sales managers need. In order to operate at Board level, you need a certain language, and a historical and cultural background of strategy-making. This chapter gives an overview of business strategy models that sales managers and account managers need to present their case internally and to work with senior customer personnel on relationship development.

So what are the strategic roles of the sales function?

Involvement – in strategy formulation

Intelligence – industry and customer knowledge and analysis

Integration – working across functions to develop value

Internal marketing – of the customer to colleagues

Infrastructure development

Source: Piercy and Lane (2005)

What is the “big picture” that drives strategic thinking?

No company operates in isolation. When business strategy is converted into sales targets without sufficient involvement of sales in the strategy formation, there’s often a serious disconnect. It sometimes seems that Chief Executive Officers and their strategy formulation teams assume that the company can drive itself anywhere, regardless of economic cycles, the activity of competition or customer behaviour.

It sometimes seems that Chief Executive Officers and their strategy formulation teams assume that the company can drive itself anywhere, regardless of economic cycles, the activity of competition or customer behaviour.

Real strategy is not like that. Strategic plans cover not only “where are we now?” and “where do we want to be?” but also the methods of getting there. Plans must be modified by consideration of the global and local business environment (see Figure 1.1).

Quite early in a strategic plan, there is usually a “PEST” analysis, of the political, economic, social and technological trends that impact on the company. Just keeping up to date with new laws affecting the operations of the company is a demanding activity. Economic conditions affect all players in the global economy, but some industries are more sensitive than others to economic swings. Food retail is a good place to be in a recession as we all need to eat, but the size of a knowledge services firm, such as systems integration, can change significantly depending on economic prosperity or recession.

Figure 1.1 The business environment.

Social trends are very important, even for business-to-business companies. In retailing, it is vital to know the patterns of the catchment area of each store, by age, income, cultural origin and family size (demographics). This enables plans to be made to get the right stock to the right stores at the right time. All demand in a supply chain is derived from aggregated consumer needs and wants. If the rising generation of consumers is concerned about the environment and social responsibility, then raw materials extraction companies need to ensure that that is reflected in their activities.

Other external impacts, such as the weather, local sporting success or national tragedies, also have to be taken into account. This analysis is a means of identifying some genuine opportunities and threats for the business.

Political/legislative factors

• Corporate governance

• Health and safety at work

• Equal opportunities/diversity

• Employment law, governing individuals’ rights at work

• Consumer protection

• Tax and duties on products/services

• Regulations governing use of land and property

• Environmental regulations

• Copyright law

• Privacy law, e.g. regulations covering spam e-mail and unsolicited telephone calls

• Prohibition/legalization of substances and activities.

Adapting to the external business environment

In 1989 in Argentina, inflation reached approximately 5,000%. The 1990s saw increased stability, but also deregulation, which opened up competition.

In a study of companies adapting to this dramatic economic change between 1989 and 1999, researchers found that flexible, adaptive companies had the following characteristics in the way they gathered information about their business environment:

• They had formal and informal ways of gathering information about the external business environment.

• They attempted to create an external orientation.

• They adopted new models for processing, analyzing and using external information.

“Every employee is aware of the importance of having an open mind and catching all they can from the sector, competitors and customers.”

Source: Hatum and Pettigrew (2006)

An important role of VP Sales is to contribute to an understanding of how PEST factors are affecting the company, and to take the lead on identifying how these factors are affecting certain customers in particular industries. Changes in external pressures can affect the way they want to buy, as we will see in Chapter 2.

You may ask how objective a PEST analysis can be. Some businessp...

Table of contents

• Title Page
• Copyright Page
• Foreword
• Acknowledgments
• About the author
• Introduction
• PART I - Strategy
• PART II - Using the Relationship Development Box
• PART III - Strategic Focus for 21st-Century Sales Management
• Bibliography
• Index