Do you hate the term coin-operated salespeople? Part 1
I am constantly amazed that many people still see this as something desirable in a salesperson. After talking to many people in different industries I am amazed at how many times this still comes up. There are many hiring managers who still ask potential candidates whether money is important to them as if this is really the most relevant question to ask a salesperson.
In my opinion as long as we encourage people to be purely motivated by money the worse our customer engagement and satisfaction will be. This will ultimately affect the true life-time value of our customers and a company’s profitability.
Consider these 6 questions:
1. Do you know of any industries or companies where there are certain times of the year or month when you are most likely to get a better price? What is worse is that this better price is only encouraging you to buy in that specific timeframe. What have you just done to your pipeline?
2. Is it likely that a salesperson that is coin-operated will not really be listening and looking after their customers long-term interests? An illustration that I have witnessed is when an account manager has a portfolio of 30 customers and is off target for the quarter. In the last couple of weeks all strategic bets are off and he will call his/her customers trying to sell anything.
3. Do these types of sales-people have long tenure with their customers? In my experience they don’t. They will often work out what the low hanging fruit is and work on the account until it has dried up. Sometimes this behavior is exacerbated when the sales manager is not close enough to the salesperson and therefore the AM’s quota is too light. This is actually double death for a company as it effects your long term relationship with the customer and means you have to recalibrate your relationship from scratch.
4. How often does the margin that a rep earns on certain products/solutions influence what they push the customer to purchase? This has different impact in different segments, services/products and industries. However as a salesperson should we ever really be selling something that is not really the best product for the customer needs? In my opinion – no – whether it is a widget, a pair of shoes or a high end IT infrastructure. What we should do is understand how we help the customer see the value in our product and change their requirements based on the trust we have built with them.
5. What is the first thing these types of people do when in a competitive situation or when the customer pushed back on the solution? They revert to price rather than a value message.
In one of Jack Welsh’s early books he shares a great example of this. GE was bidding for a multi-million dollar piece of business from Boeing. The CEO of Boeing and Jack Welsh (CEO of GE) had a meeting where the Boing exec told him “I am going to tell you something but you cannot share this with anyone in your organization”. Jack Welsh promptly agreed and the Exec then told him that although the deal and tendor was some 6-8 months away from being complete that they had already decided that GE has the best product (engines) and they were going to purchase from them.
Jack Welsh then spent the next 6 months having to listen to his sales force coming to him every week saying that they needed to sharpen their pencils on price, the deal could go either way, etc etc. In this example I would say that the sales team were not asking the right questions, were not engaged in the right levels of Boeing and perhaps knew that to shave margin from GE was still going to allow them to earn huge amounts of money from a deal this size should they land it.
6. Are purchasing decisions made in different ways now than 10 years ago? I think social media, the Internet word of mouth are going to continue growing in importance as decision making influencers. Furthermore poor service and satisfaction will also be highlighted. This will be true in various degrees dependent on industry. However something that has always been true and will never change is customer referrals. When a sales person gets recommended as credible and trustworthy the door is not only opened for them but the keys given too! Coin operated sales people won’t get this.
7. How well aligned are the companies corporate values with the sales team values? Most medium size and larger orgnaisations have a set of corporate values (and coincidentally they all seem like they have come from a very similar template). There should not be a set of values for salespeople that are different from the corporation and the values should not change from month to month or quarter to quarter depending on revenue results. If behaviour is compromised in a “moment of truth”. If you have to make a decision between values and revenue what should you choose?
I am not saying that sales renumeration plans are wrong. However it is time for many companies to view what they are trying to achieve and the results they are getting from their compensation plans. How do we solve this dilemma and continue to grow our businesses for the long term and create a truly valuable asset in our sales force? Part 2 will give some ideas . . .