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Several years ago, I was given the honor of serving as the president of my trade association, the Specialty Tool and Fastener Distributors Association. One of the long-standing traditions is to give the president a small statue depicting “The Peddler.” Imagine an older gentleman with a knapsack and walking stick wandering around and peddling his wares from town to town.
Obviously, the profession has grown from these humble beginnings, but our current crop of “peddlers” still retains some of the characteristics of the gentleman salesperson. They often wander from office to office, site to site, looking for an opportunity to share their goods with prospective customers. The peddlers of yesteryear were responsible for the entire transaction, from presentation to fulfillment to the ultimate collection of payment.
Our sophistication of these steps may have improved, but many modern-day peddlers continue to take on these aspects of the sales completion process. Is this how we want to deploy our most expensive assets?
As I was growing up in the business, I saw how this outside sales position was lauded as the most important function in the organization. This was the pinnacle position and with it came the most financial reward. This lofty compensation was not entirely unjustified. Sales reps were often responsible for finding the prospect, getting the credit application signed, enticing the customer to place the first order, pricing the invoice accordingly and, in many cases, delivering the recently fulfilled order.
That is a lot of effort for the modest gross margin built into these transactions. You might even have a few salespeople who still operate in this manner. The problem with this model is the limitation of time.
A salesperson performing all or some of these functions has a severely limited ability to serve multiple customers. We often see this type of salesperson relying on a modest number of high-touch customers cultivated over the years, literally putting all their eggs in very few baskets. If one of those customers leaves the fold for one reason or another, the salesperson and company will take a tremendous whack to their revenue.
This is why most organizations become extremely nervous if any one of their customers’ accounts for greater than 20 percent of the income. You never know what the future holds in the life cycle of your best customer.
Another severe limitation to the income-generating potential of a legacy sales representative is access to information. I will freely admit that modern technology has allowed field sales representatives access to pricing and availability of products. Unfortunately, they rarely obtain access to scheduling and the logistical capabilities of the operations team.
Without this critical information, there is a tendency to overcommit resources and find themselves having to mend fences when service promises are not met. If you want to provide reliable service, commitments need to come from those closest to the operation. A strong inside customer service team can help fill this role.
Refocusing Field Sales Attention
If we are going to shift more responsibilities to the inside, what are the field salespeople going to do? They are going to do what they were born to do — create opportunities in the market.
When I look at those personalities who have been most successful in the field, I see some basic commonalities. Field salespeople possess the ability to make customers comfortable with a business transaction. They build trust through questions and answers. They listen for pain points and share solutions. They generate interest and excitement in the products we choose to represent. They know how to persevere in the face of rejection. And they know how to hustle.
A direct correlation exists between the number of faces a field salesperson gets in front of and the amount of order activity generated. So why do we burden them with mundane, detail-oriented, nonrevenue-generating tasks that slow them down?
I have spoken with countless sales managers and field sales personnel over the years, and they all agree that the old model must change. I hear this all the time, “How do I get my people to call on new accounts?” There are a couple of ways to approach this problem. First, change the expectations of the field sales role. Second, change the compensation to reward new account generation.
Many of us who have been around distribution sales for a few years admit that the majority of the transactional work associated with a legacy account is performed by someone working inside the four walls of our company. They take the phone calls, create the order, hopefully ask for a few additional accessory items and schedule the delivery or pickup.
Over time, customers will often develop a stronger relationship with their inside contacts than their outside representation. It is not anything negative about the field salesperson; it is simply a matter of interaction frequency.
In my opinion, field salespeople should concentrate on four basic tasks: opening new accounts, introducing the breadth of product, performing field demonstrations when necessary, and solving problems when they arise. As an incentive to hunt for new accounts, I like to see clients create a two-tier commission structure.
For the first 12 months of the new customer relationships, pay field sales representatives a higher-than-average commission rate. This is to compensate them for ramp up and to give them a reason to drive the new customers into several product categories. After 12 months, relationships will naturally shift to inside teams.
At this point, I advocate a small “legacy” commission rate because we still want field salespeople to go solve problems; imagine 15 percent for the high and 3 percent for the low. I would use the commission savings to shift some money to the inside teams for their efforts. We still want the customer to stay with us, and it would be great if we could continue to expand their product category participation.
If we refocus our attention on how to make our field salespeople nimbler, they will be able to generate more excitement in the market. Because of their strong interpersonal skills, we still want them to be there when conflicts arise. Instinctively, they can work through the challenge and find solutions. They are the representatives of our company brand. The best use of their time is to keep charging down the field and planting flags.
If your company is bogged down in the peddler mentality, find ways to remove that cumbersome knapsack and hand your associate a pickaxe. It’s time to quit peddling and let them start doing some real prospecting.