It may not be obvious at first glance, but Whirlpool, Xerox, Cintas, and Sprint have a lot in common. But it’s not product or territory or even the technologies they embrace. What they have in common is how the rapid pace of change affects the sales function.
Information technology has made both salespeople and their customers much better informed. This simple fact has had huge ramifications throughout the sales process. It has required smarter and better-trained reps to do much more consultative selling, and it means compensation plans must focus on business results, not just volume.
Constant improvement and lifetime learning are required in order to advance and often just to remain on the sales force. And managers must offer much more than just good comp plans to motivate and retain these better reps.
That’s the picture painted by several senior sales leaders as they discuss changes in sales.
“When I was hired, all that was important was developing the relationship, the ability to negotiate, having fire in the belly, and tenacity,” remembers Sam Abdelnour, vice president of sales of the North American region at Whirlpool. “Now I am looking for smart people who can understand and use business analytics to explain and provide value to customers.”
Indeed, Abdelnour says analytic services that his firm brings to its customers – generally the retail outlets that sell Whirlpool and other appliances – have become more important than product and price in winning their business. “We can show them what brings their customers in the door and what retains them.”
One result is that Whirlpool increasingly recruits graduates of universities that offer sales curricula. Retaining these smarter and better-trained salespeople is also harder. “They do not expect to stay with one company for a lifetime, and they seek a better balance between life and work,” Abdelnour emphasizes. “You have to communicate your strategy, tell them where they are going to be in five years, and give them the tools to be successful.”
The explosion of such technologies as Blackberrys, iPhones, and iPads has not only replaced some face-to-face meetings, but also changed the environment of the meetings that still occur. “It used to be when you sat down with a client, you gave each other your full attention,” Abdelnour says. “Now this is just part of many things you are doing.”
Now a buyer can effectively conduct negotiations with many competing vendors simultaneously. “In the old days, difficulties in passing information did not allow that,” Abdelnour says. “I had to check with several offices, and by the time I got a response to the client, [the information] was out of date. Now if a buyer wants information, I can get it to him or her instantaneously.”
Buyers know that reps now have much more information about products than simple prices and specifications. So, at least in Abdelnour’s industry, the sales cycle has become much shorter, even as winning the business has gotten harder. “Buyers have much more information, and they are dealing with multiple vendors at once. In the past, if you were good enough at negotiation, you could close [the deal] right there, because the buyer often did not know what the alternatives were.”
And it is not only the sales cycle that has accelerated. Often, the product cycle has, also. “We used to introduce a new product about once every five to seven years,” Abdelnour remembers. “Now we incorporate innovations almost annually.”
But some things have not changed much in Whirlpool’s world. For motivating and keeping the sales force aligned with company goals, Abdelnour argues that face-to-face meetings among sales leaders and reps should still be held several times a year. At Whirlpool, this means combining annual and regional sales meetings.
“You need high-energy meetings to celebrate with the team and talk about best practices,” Abdelnour urges. Whirlpool holds an annual Winners’ Circle competition, with reps competing all year to be in this contest. It’s held before an audience of the contestants’ fellow reps. And Abdelnour constantly uses voicemails or emails to strengthen his relationships with the managers and reps he meets at face-to-face gatherings.
Over the years, Whirlpool has experimented with a variety of sales-compensation strategies: straight salary, straight commission, and a mixture of both. Performance comp has been based on either volume or value. At this point, the company has settled on a combination of salary, commission, and bonus. Commissions are paid for selling the right mixture of product lines, while bonuses are paid chiefly for profit margins.
“Like other companies, we used to pay for selling boxes,” Abdelnour says. “But I don’t want our salespeople to wake up and ask, ‘How can I sell more today?’ I want them to wake up and ask, ‘How can I make more money for me and my company?’”
That, the sales VP is convinced, will motivate his reps to do the best for both Whirlpool and its customers. Or at least it will under one condition. Abdelnour explains, “It goes back to what I was saying: I want my reps to be smart businesspeople.”
“Customers are much better informed through the Internet and sourcing organizations,” says Kevin Warren, president of United States customer operations at Xerox. Customers thus have more power. They can invite in more bidders, and bidding is more competitive. “It is tough out there,” Warren stresses. “Reps must be aware of this. Their value proposition must be tight, and the costs and values must resonate clearly with customers.”
Relationships still matter because people trust confidants. “But relationships will not trump value,” Warren says. “You must balance the personal with a proposition that will be seen by many eyes.” Buying decisions have become more collaborative, involving the buyer’s superiors and colleagues. On average, there are now four customer employees involved in every Xerox sale.
For recruitment, Xerox now looks for seasoned businesspeople who can talk to customers. “Our value proposition is that we take care of document management to help you run your business,” Warren explains. “So we look for consultative and business-savvy salespeople.”
Xerox follows this same logic in providing incentives for sales reps. Commissions are paid, not on orders, but on delivery of the product and the customer’s satisfaction with it.
Compensation and advancement within the sales force used to be based on just consistent delivery of results. “Traditionally, that was all you needed – deliver, and you would be promoted,” Warren says. “Now we look for two more behaviors.”
The first behavior? That colleagues like working with a salesperson or sales manager, and the employee makes the company a better place to work. “Can you build a coalition as a team, share information, and be a good colleague?” Warren asks. “Some hard chargers fall down in this area.”
The other much-sought attribute includes steadily increasing competencies and a commitment to lifelong learning. Continues Warren, “Are you better in 2011 than you were in 2010? Are you smarter today than yesterday?”
“Hiring and retention of sales talent is closely connected,” summarizes Todd Schneider, senior vice president of sales at Cintas. Increasingly, highly motivated sales reps want to develop as businesspeople and leaders.
“In earlier years, reps said, ‘Teach me your products and services, and I will go sell them,’” Schneider says, but today’s reps are looking longer term. “They want a commitment that the company they are going to go work for will invest in them by building a career foundation, not just a job. We want them to have a vision of their career, but we have to paint that vision for them,” Schneider says. The caliber of new salespeople has increased, and Cintas must invest to teach products, skills, and company culture.
Schneider sees technology having a major impact on sales and expects further technological changes. He says that having access to more information changes the sales profession in several ways: “Reps are better prepared. They can research a prospect with the intelligence that is available quite literally at their fingertips before they ever pick up the phone. And they’re faster at what they do.” Even if competitors enjoy the same advantages, better-prepared and faster reps tend to sell more in less time.
Cintas gives each rep in the field access to all the information available at headquarters in what Schneider calls a virtual office. The improvement in prospect data has been especially important for certain market segments. “Years ago, it was hard to put together a call plan for a small or medium-size business,” Schneider says. “Not any more. The data is available, and we collect it and give it to [our reps].”
But better tools have raised the bar for other segments. “Reps need to be more strategic before they pick up the phone, because it’s more difficult to reach the decision maker,” Schneider says. “Technology provides more avenues but at the same time poses more challenges in reaching key decision makers, especially in larger accounts. So you have to be more creative.”
Technology has also created a more informed consumer. Schneider says this situation favors his firm, because his company can provide so many more products and services than most competitors. “Customers have access to more data on us and the industry, and we think that is good for us.”
Schneider does not see any major change in the length of the sales cycle. Reps work more efficiently, and information flows much faster. But on the other hand, it takes longer to get to decision makers. These two effects tend to balance out.
Salespeople are still motivated chiefly by compensation, recognition, and opportunity. Cintas has several recognition programs for top performers. In one program, valuable reps mentor younger salespeople, which both helps new reps and prepares senior salespeople for management responsibilities.
Compensation has changed to reflect greater interest in benefits, as well as cash comp. Cintas offers cash, choice of healthcare plans, 401(k) with company match, employee stock options, bonuses, and other benefits. “In the past, employees were interested in short-term bonuses or commissions. Now they are much more interested in the total package. And they want to know about the total company, too. All this is good, because salespeople should be thinking long term.”
The sales organization has also changed at Cintas. “We have more sales positions than we ever had before,” Schneider says. “In addition to hiring standard sales reps or for segment selling positions in hospitality or healthcare, for example, we have matrix sales positions.” These salespeople must manage relationships with both customers and field reps. Schneider says these matrix positions are especially attractive to reps who are interested in management positions outside sales. At the same time, adds Schneider, “it has made our organization more complex.”
“Sales cycles are longer now,” says John Dupree, Sprint’s senior vice president of business sales. “In the old days, to build a network you responded to the RFP [request for proposal]. Now you have to penetrate many parts of the organization to build a productive solution.”
Another change affecting sales is the sheer volume of information that sales reps must have at their fingertips. “They don’t have to know that much more, because we are all maxed out on intellectual capacity,” Dupree says. “But they must be able to get the information and put together the value proposition on the fly.”
And access to knowledge must go in both directions. Sprint used to define customer focus as “staring intensely at customers,” Dupree says. “Now it also means staring intensely at Sprint and seeing what we can do.” Sprint’s sales force uses every communication technology: email, voicemail, mobile devices, and social media.
To meet the new sales challenges, Sprint must recruit smart, high-energy, and enthusiastic salespeople: “We do not need engineers or IT people, because their knowledge may be out of date.” To motivate the team, Sprint pays commissions usually based on improvement from last year’s performance. But cash comp is no longer enough to hold on to the skilled salespeople that Sprint’s rivals are often trying to attract. “We also have to recognize their contribution and give them the sense that they are changing the industry.”
Dupree thinks that recent tough times have made sales forces much more efficient and the economy will reap the productivity gains as growth returns. In short, much smarter salespeople are often making much tougher sales today. Over the long haul, that should benefit everybody. •
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