Sales Management

Any sales professional will agree that calling on American corporate managers is becoming increasingly difficult. Try calling ten managers in large corporations today. The odds are that you will reach only one or two actually in their offices working on pursuing fresh opportunities. All the others will be in meetings to solve management problems.

Typical problems they will be discussing include: poor sales results, disagreements about budgets, installation of new technology, reorganization of corporate structure, quality problems, conflicts over territories, office space, parking space, dress codes, obsolete control systems, duplication of work, etc. The list can be endless.

Management guru Peter F. Drucker has admonished American management for decades with this insight: “All one can hope to get by solving a problem is to restore normality. Results must come from the exploitation of opportunities.”

Poor management is often the root cause of business failures in America today. Fact: In the first half of 1992, over 50,000 businesses in America went bankrupt — a 17 percent increase over the same period of 1991. Fact: 47 percent of the organizations that were “Fortune 500” companies in 1982 are no longer there in 1992. They experienced a similar fate as some of the organizations featured in Tom Peters’ 1983 bestseller, In Search of Excellence. Follow-up studies showed that 12 of the 14 firms that lost their luster of excellence within two years of the book’s publication failed to adapt to fundamental changes in their markets.

Tom Peters admitted later in an Inc. magazine article: “In Search of Excellence was definitely not about American excellence. Rather it was about a few rare pearls in a sea of growing despair.” In another article published in The Economist, Peters blamed management tools instead of management thinking.

He wrote: “Our so recently tried and true management tools are arguably worthless, many are downright dangerous.” The late publisher Malcolm Forbes saw things differently when he said, “The toughest obstacle to overcome is success.” It appears that even the best managers overlook that their thoughts are the product of their times. As times change, thoughts and tools become obsolete.

Each year, hundreds of new management books are added to the over 20,000 that already exist. Very few of these have stood the test of time and even fewer have been read by those who could benefit from fresh insights. Many managers tend to become myopic when it comes to new knowledge, new information and taking new risks.

Former ITT president Harold Greenen writes in his book Managing, “One of the primary, fundamental faults with American management is that over the years it has lost its zest for adventure, for taking a risk, for doing something that no one has done before. The reason behind this change is the mistaken belief that professional business managers are supposed to be sure of themselves and never make a mistake.”

CUSTOMER SATISFACTION — THE SALES MANAGER’S COMPASS

No matter what your company sells, a sales manager’s most important contribution to business is to help create and keep customers. Unfortunately, tradition has it that many industries do not call a customer a customer. To a hospital, customers are patients. To an association, customers are members; to an insurance agency, customers are policy holders; to an airline, customers are passengers; to a limo driver, a customer is only a fare.

If the survival of a business depends on satisfying customer needs, why do some insurance companies write letters that begin with “Dear policy holder”? The point is that the words we attach to our customers determine their feelings about our service. A business that grows indifferent or insensitive towards its customers or its salespeople ends up paying a heavy price.

In his book Managing for Results (Harper & Row, 1964), Peter F. Drucker describes the unforgiving law of business: “No single product or company is very important to the market. Even the most expensive and most wanted product is just a small part of a whole array of available products, services, satisfactions. The customer cares just as little for any one company or any one industry. There is no social security in the market, no seniority, no old-age disability pensions. The market is a harsh employer who will dismiss even the most faithful servant without a penny of severance pay.”

Drucker suggests that business owners should never forget that “the customer is the business.” He emphasizes the point by saying, “The Cadillac competes for the customer’s money with the bass boat, jewelry, the skiing vacation in the luxury resort, and other prestige satisfactions.” While customers have thousands of choices for finding satisfaction, most salespeople have a tough time just finding one good customer.

Management consultant Karl Albrecht, author of The Only Thing That Matters, Bringing the Power of the Customer into the Center of Your Business (Harper Business, 1992), suggests that customers are very critical when they choose their sources of satisfaction:

“…everything you do communicates. The look and feel of the operation, the pace of things, the way employees are treated by their bosses, the way bosses treat the customers they deal with, the importance attached to delivering the value package with style and quality — all these are messages.”

Question: Does the customer come first in your business? Just to be sure, check the side box entitled “How Well Do You Manage Customer Satisfaction?”

INCREASE SALES BY LETTING YOUR CUSTOMERS DRIVE YOUR BUSINESS

An organization that is always alert, ready, able and willing to truly listen to its customers and is 100 percent committed to serving its customers’ needs doesn’t need to fear competition. Richard C. Whiteley, vice chairman of the Forum Corporation, suggests in his excellent book, The Customer Driven Company, Moving from Thought to Action (Addison Wesley, 1991): “Saturate your company with the voice of the customer. Create real intimacy between yourself and the customers. You’ll revolutionize your own behavior and you’ll remake your competitive position.”

As an example, Whiteley cites Binney & Smith, the makers of Crayola markers. Management found that customers complained about stains left in clothes. This led to research into washable Crayola markers which doubled sales and increased profits.

More and more sales organizations systematically survey their customers in hope of finding new ideas for sales and profits.

Other companies take the idea a step further and empower special teams to examine opportunities for better customer service and productivity improvement. Peter Fleming writes in Management Review magazine (Dec. 1991), how Prudential Insurance Company’s Northeastern Group Operations found that what customers wanted was (1) faster responses, (2) lower prices and (3) increased flexibility. Prudential appointed a team of 40 employees to become “customer satisfaction representatives” with the task of making decisions about service quality.

A second team of “operational improvement consultants” was created to promote cost reduction objectives. The results: management delegated authority to the lowest level, cut down functional barriers, reduced claim response time by 50 percent, cut unit costs by ten to fifteen percent, saved over a million dollars, made in-house staff more productive while new business sales revenue jumped 40 percent.

EMPOWERMENT: HOW TO START A WINNING SALES TEAM

How can sales managers improve the quality of doing business, for the customer, the salesperson and themselves? The answer: empowerment. The term empowerment stands for the creation of a new corporate environment in which individuals at all levels are expected to exercise whatever power is necessary to remove barriers to better performance. Empowerment gives employees more authority for making on the spot decisions that benefit both the customer and the company.

Federal Express founder Fred Smith, whose company was one of the first to embrace the process of empowerment, says, “In a service company, each interaction with a customer can be priceless or disastrous. Customer satisfaction begins with employee satisfaction.” Smith reasons that empowered employees will deliver impeccable service and profits will be the natural outcome.

In a sense, empowerment is a corporate belief system based on trust and training with the twin goals of adding value to every job and creating more value for every customer

Milliken & Co., last year’s Baldrige Award winner, found that empowered employees enhance teamwork and customer focus. Every employee in the company, even those who are not working on the front line, is fully aware that they have customers. Milliken’s staff cut paperwork by 2,000 pounds per year, quality soared, sales and profits increased and customer satisfaction reached a new high.

Today, empowerment has become a widely accepted management force that has become common practice by companies such as AT&T, IDS Financial Services, Xerox, The Prudential, Goodyear and many more. Empowered sales teams can make a wider range of decisions and are capable of forming true partnerships with their clients.

Managers who believe that people are inherently lazy or not trustworthy will have a hard time with empowerment. Bill Byham, CEO of Development Dimensions International and co-author of the book Empowered Teams (Jossey-Bass, 1992), argues that global competition demands flat, fast and flexible organizations. He states, “As organizations adapt to worldwide competition, the dimensions related to job success and failure change. In flatter organizations, individuals and groups must be empowered to make decisions.”

Recent corporate failures seem to prove Byham’s point. The top-down, heavily controlled management pyramid no longer works.

Sales managers have to give up the outmoded roles of the controller and director. As their sales team engages in the process of empowerment, sales managers must shift their efforts to coaching and leading the team effort towards new and better opportunities.

EVERY TEAM NEEDS A COACH… AND A UNIQUE REASON FOR WINNING

While empowering a sales team requires intensive training for everyone, leading the team from opportunity to opportunity and from victory to victory demands better leadership skills.

How does the manager help individual team members contribute all they’ve got? In the search for role models, many managers try to import the Japanese methods for leading their teams to success.

Konosuke Matsushita once commented on the superiority of Japanese management in a speech saying, “For us, the core of management is the art of mobilizing and pulling together the intellectual resources of all employees in the service of the firm. Only by drawing on the combined brain power of all its employees can a firm face up to the turbulence and constraints of today’s environment.”

Dr. Abraham Zaleznik, who held a Matsushita sponsored chair in leadership at the Harvard Business School, explains that Japanese methods are not easily transferable. In his psychologically insightful book The Managerial Mystique, Restoring Leadership in Business (Harper & Row, 1989), Zaleznik writes, “Japanese society illustrates the importance of communal integration, which accounts, in part, for the ability of Japanese managers to increase productivity. Japanese managers and institutions accept dependency without question and also expect compliance. Their goals are driven by the perception that for Japan to survive as a society, it must grow economically through export.”

While Japanese teams are fused by the culture bound need for survival, American teams are diffused by the ego bound need for individuality. Should we conclude that American leaders need to pressure teams into a “survival mode” in order to evoke unity?

Steven R. Covey, the author of the international bestseller, The 7 Habits of Highly Effective People, says “No.” His solution is to guide people through sound principles, not senseless pressure.

PRINCIPLES: THE LEADERSHIP TOOLS OF PROGRESS

Covey, a dynamic management guru, developed a highly practical prescription for leading teams to success. Covey suggests in his newsletter, Executive Excellence, that we need to look at human weakness with genuine compassion and understanding, rather than with accusation and self-justification.

In his book, Principle Centered Leadership (Summit Books, 1991), he offers a masterful management technique for reconciling individuality with the team’s need for winning. Covey reasons, “If you give people freedom, you may also get some loose cannons who do stupid things. How can we empower other people with confidence and competence to solve problems and seize opportunities — without fearing loose cannons? The common answer is to create rules and regulations, but they also suppress freedom.

“So what’s the solution? To come up with a set of principles and a common vision that everybody can buy into — and then to make people accountable to the principles as perceived by all the stakeholders.”

Covey goes beyond empowerment — he introduces the power of principles and the magic of vision. But how does he move the team from success to success? Covey’s secret consists of one word: information. He writes, “When you get enough people with information, you raise the consciousness and unleash energies. The higher the consciousness, the more the social, national and political will develops. For the principle centered leader, information then becomes power, the power of a collective will to accomplish the mission of the organization.”

BENCHMARKS — NEW BLUEPRINTS FOR CONTINUED IMPROVEMENT

There isn’t a manager anywhere who is against continued improvement, yet very few sales managers can honestly say that their team has steadily improved during the last 24 months. Sometimes sales managers place too much faith in the power of expectations. An old saying suggests that salespeople respect what their managers expect and inspect. Sure, the power of expectation is a valid management tool when it comes to improving the performance of a new group, or a new salesperson. But once a sales team has reached a certain level of success, sales managers should look outside themselves to find out just how much further — beyond their expectations — their team can grow.

Instead of perpetuating the idea that the manager’s expectation is the best benchmark for sales improvement, new benchmarks should be tested to renew the improvement process.

Why is this so hard to do? Because a manager’s expectation is often a source of pride or a hidden fear of having to admit failure. But what exactly is benchmarking?

Benchmarking is the process of comparing how one department executes a task within the organization to that of a similar department in another corporation, regardless of its industry type. Xerox Corporation has benchmarked many of their departments against the best departments in the best companies in America.

Bob Camp, VP of Xerox, was quoted in Financial World: “Benchmarking is nothing more than admitting that someone else is capable of doing something better than you.”

Kathleen H. J. Leibfried and C. J. McNair wrote in their book Benchmarking, A Tool for Continuous Improvement (HarperCollins, New York, 1992): “In order to begin down the path to continuous improvement, management has to revisualize the organization, focusing on the flow of activities across the functional areas, rather than on the performance of any department or person.”

Benchmarking can help the sales manager set new targets and develop new ideas for how to reach them. Like all improvement, benchmarking starts with basic questions. Below are ideas that can help you start your own benchmarking process:

1. How well are we doing as seen by our customers? What do they expect from us? How can we improve to meet or exceed their expectations?

Benchmark plan: Customer surveys.

2. How well are we doing as seen by our salespeople? What goals do they want our company to achieve? How can we help them be the best that they can be?

Benchmark plan: Survey salespeople.

3. How well is the sales department performing as compared to the best department in our organization? What methods and practices can we adopt? How can we meet or exceed their standards?

Benchmark plan: Identify best department in your company and compare productivity standards.

4. How well are we doing as compared to the sales departments in our industry? What are their sales costs per salesperson? What is their production per salesperson? What is their turnover of sales personnel? How do the best companies in our industry train their salespeople? What are the best industry selling practices?

Benchmark plan: Contact industry association.

5. How well do sales departments in other industries perform? How do they recruit, hire, train and reward their salespeople? Which incentive programs work best for them? Which of their methods and practices can we adopt?

Benchmark plan: Compare your sales department against the world’s best sales teams.

The Japanese use the word “dantotsu” which has no equivalent in the English language. Dantotsu is best described as “better than the best.” Dantotsu gives the sales manager a mental blueprint for improvement that goes above and beyond the highest expectations.

CORPORATE CULTURE — THE SYMBOLIC SELLING POWER

Webster’s defines culture as the beliefs, customs, arts and institutions of a society at a given time. For example, when Thomas Watson, Sr. founded IBM in 1914 he wrote his personal beliefs, his core values, on paper. They became the foundation of his new company. He wrote: (1) The individual must be respected. (2) The customer must be given the best possible service. (3) Excellence and superior performance must be pursued. Watson’s personal values became the foundation of IBM’s corporate culture and anyone who worked for IBM thereafter knew exactly what the company was all about.

To this day IBM’s culture is rich with symbols, rituals, and traditions — like the grand gesture PBS sponsoring, the button-down white shirts, the reserved, well mannered, wingtipped-shoe executive, the IBM blue logo. These are all cultural symbols that command respect. (Editor’s note: Read more about IBM’s culture and historic marketing magic in the bestseller The IBM Way, by Buck Rodgers, available in paperback, Perennial Library, 1986.)

For a corporation to survive, it has to achieve a balance between its solid culture symbols (values, vision and virtues) and its adaptive elements (processes, plans and programs). Cultural conflict occurs when the company’s size outstrips its capacity to adapt.

For example, when Apple hired John Sculley it marked the beginning of a far reaching cultural transformation process. In her fascinating book, When Giants Learn to Dance (Simon & Schuster 1989), Harvard Business School professor Rosabeth Moss Canter writes about her personal experiences with Apple’s entrepreneurial culture: “During the first months of 1985, I met several times with staff urgently plotting solutions to these problems (including getting Steve Jobs private MBA tutoring), and I heard the first rumblings of changes at the top.

“On the surface, it was the same old cash-rich, free-spending Apple; our meetings, for example, were at one gorgeous California resort after another, and I was picked up at and delivered to the airport in the white stretch limos favored by Apple executives. Managers still felt Apple was totally unique — no other company could be used as precedent or model — and the party line was that the task was to preserve what was best in Apple’s culture against the onslaught of creeping large-size-itis.”

HOW POSITIVE CULTURE CHANGE LEADS TO INCREASED SALES

Why is it so important to adapt and transform the corporate culture? Because a solid, adaptive corporate culture adds value in the customer’s eyes, promotes synergy among employees and shapes the company’s destiny beyond the original vision of its founder.

Two Harvard Business School professors, John P. Kotter and James L. Heskett, examined the bottom line impact of a corporate culture in their landmark book Corporate Culture and Performance (Free Press, 1992). The authors found that (1) corporate cultures can have a significant impact on a firm’s long-term performance and (2) that corporate cultures will probably be an even more important factor in determining the success or failure of firms in the next decade.

Can managers change the corporate culture, and at the same time enhance performance, even if the existing culture is entrenched?

The authors concede that it is a formidable challenge, yet their study suggests that strong leaders with a realistic vision have been successful with cultural turnarounds. Kotter and Heskett report, “In all ten of the cases we studied, major change began after an individual who already had a track record for leadership was appointed to head an organization. Each new leader succeeded in persuading important groups and individuals in the firm to commit themselves to that new direction and then energized the personnel sufficiently to make it happen, despite all obstacles.

“Ultimately, hundreds of people helped make all the changes in strategies, products, structures, policies, personnel, and (eventually) culture. But often, just one or two people seem to have been essential in getting started.”

One of the leaders in successful corporate culture change was former chairman and CEO of Xerox David Kearns (See Personal Selling Power April 1990, cover story David Kearns: From Salesman to Chairman). Kearns and his team worked on the turnaround between 1983 and 1989, increased sales from $8.5 billion to $17.5 billion and increased copier market share from 8.6 percent in the early 1980s to 16 percent in 1991. Also, under Kearns’ stewardship, Xerox won the Baldrige National Quality Award.

VIGILANCE WILL SAFEGUARD YOUR VICTORY

As Tom Peters has unintentionally taught us, the pursuit of excellence is no guarantee for corporate survival. On October 24, 1991, the Dallas Morning News reported that by the time the Wallace Company, another Baldrige Award winner, took possession of the prestigious statue in December 1990, the small firm had laid off about 80 of its 280 employees, hired a turnaround specialist and held nonstop meetings with bankers and attorneys to restructure about $20 million in debt.

Wallace won through customer satisfaction, high quality and employee productivity in 1990. But the company’s financial fortunes began to turn in September 1990 when Maryland National Bank sent a letter to John Wallace saying that it wanted to get out of asset based lending. Confident that there was enough time to look for another lender, Wallace and his team focused on the Baldrige award while the market slowly softened and sales slumped.

Soon the company experienced a serious cash-flow crunch. The turnaround consultant Gail Cooper told the reporter that what really cinched things was that top management concentrated too much on meeting a flood of requests for speeches and tours because of the Baldrige award and did not concentrate on the main issue: business. In an effort to recoup, Wallace later canceled 50 Baldrige related speaking engagements and split sales and operations functions to emphasize sales.

On January 28, 1992, however, Wallace filed for protection from creditors under Chapter Eleven. According to a Wallace spokesperson, Shaw Industries is planning to acquire Wallace Co. and as of mid-August ’92 Shaw is waiting for court approval of the proposed acquisition.

As the Wallace example indicates, management in pursuit of excellence can easily lose sight of their mission and fail to adapt fast enough to changing market conditions. Many managers tend to overfocus on methods for doing things right, instead of concentrating on effectiveness by doing the right things.

That still leaves the question: what is the right thing to do? Each industry has a different set of problems, each market has its own chaotic currents, and each company faces a different mix of challenges and opportunities.

The World Future Society once listed “2,653 problems facing humanity” from nuclear war, to pollution, to AIDS. The list is overwhelming, and the range of problems salespeople and managers face each day sometimes can feel like carrying the entire burden of the world on one’s shoulders.

Someone wise once said that a business is like a fire breathing dragon and the manager has two never ending jobs. The first is to feed the dragon to keep it moving, while the other is to extinguish the fires the dragon leaves behind as it moves forward. The manager must remain evenly vigilant in moving the dragon further into the marketplace in pursuit of realistic opportunities in order to create more value for every stakeholder involved — management, employees, stockholders and customers.