Challenges Sales Leaders of the Future Will FaceThoughts and predictions from the most eminent practitioners and thinkers in the business.

TM

RIGHT PEOPLE, RIGHT ROLES, RIGHT DEVELOPMENT PLAN.

TALENT ANALY TICS

Compensation

Value

What challenges will Sales Leaders of the future face?And how will they rise to meet them?Technology. Globalization. Specialization. Speed. We see predictions about their effect on business practically every day. But while the concerns of the “CEO of the future” are often discussed and debated, what about sales? What will the sales leaders of the future need to do to compete effectively?

To explore this question, Chally Group Worldwide co-founder and Chairman Howard P. Stevens sat down recently with some of the most eminent practitioners and thinkers in the business: Neil Rackham, renowned speaker and author on sales, and Andy Zoltners, Co-founder of ZS Associates and Frederic Esser Nemmers Distinguished Profes-sor Emeritus of Marketing at the Kellogg School of Management at Northwestern University. As part of an ongoing conversation about the future of sales leadership, Stevens asked them what sales leaders can expect in years to come, and how they can prepare.

Education

Training

Consulting

ResourcesStructure

Technology

Education vs. training

This begs the question of how the sales person of the future can consistently perform in this new role as a trusted advisor. Rackham sees an increased focus on education. Rather than giving a lot of specialized training to generalist, sell-me-this-pencil candidates, he foresees recruiting people who have the specific education and knowledge to deliver a higher level of expertise. “We’re not looking for an MBA in sales, but rather for the kinds of things that go into an MBA.”

Does this shift mean that sales people will become management consultants? Perhaps. But according to Rackham, the leadership role in high-level selling teams might call for someone who finds and delivers the ap-propriate expertise, rather than having it themselves.

As he explains, “a big eye-opener for me in some recent research we did was that the best account managers weren’t the ones who spend the most time out talking with the customers. The top players spend nearly all their time working internally. Why? Because by focusing on the way the company serves the cus-tomer, managing the relationship between the two companies, they could create more value.”

Sales or Consulting?

Psychometric evidence tells a similar story. Chally Group research shows that many of the characteristics that are most predictive of high-level success in sales overlap strongly with those that predict the best senior managers. In practice, says Stevens, “Whatever their job description may say, top sales people succeed by taking on more of an internal management role. They manage the resources in their company, orchestrating them to meet the needs of a particular customer.”

He points to additional research by Arun Sharma, Professor of Marketing at the School of Business Administration at the University of Miami, indicating that the top 20% of a sales force consumed 52% of the company’s total resources. This supports the idea that even today, success in sales leadership “takes people who know how to manipulate processes within the company to the advantage of their customers.”

A brief history of the customer

The first question was one that should begin ev-ery sales conversation: what does the customer need? All agree that today’s customers are mov-ing toward a very different set of expectations. Zoltners notes that thanks to the Internet, an in-formed customer can learn about you and your product, objectively and in detail, even before the first contact. “So the traditional function of showing that your mouse trap is better than the next person’s mouse trap is no longer relevant.”

The more sophisticated, consultative function of problem-solving could meet the same fate. Ac-cording to Rackham, “Today the evidence shows that sales people who can anticipate problems are much more valuable that those who can solve them.” One survey respondent put it this way: “If I fall into a hole, most sales people can help me climb out. But not many can prevent me from falling into the hole in the first place.”

Stevens summarized the evolution of the cus-tomer’s expectations in three stages. The first stage of sales was simply to introduce a product and demonstrate its value. The second was to provide additional value by solving problems for the customer. The third will be to tell the customer what those problems will be before they happen. While the best people have always provided help and expertise, “now that’s just the ticket to the dance,” says Rackham. “Today com-petitive advantage comes from having deeper insight and vision, all the time.”

Conserving resources

On the other hand, the same study showed that the top 20% of performers brought in 54% of the business – considerably less than what the “80/20 rule” of con-ventional wisdom would predict. So the standouts fail to significantly outperform average in terms of earning a return on the resources they spend.

As Rackham puts it, “over-resourcing the best op-portunities may be the most successful of all sales strategies today. But it’s often simply the most senior people who shout the loudest who can allocate those resources.”

He believes that opportunity management will have to be a much greater focus in the future. “In a world in which it costs IBM half a million dollars in global services just to bid on a major piece of work, this kind of infor-mal approach isn’t sustainable. Organizations are going to need much more rational decision processes.”

Managing through compensation – or through management?

If the sales leaders of the future look more like specialized business consultants, professional managers, or both, will they still be compensated largely by commission?

Zoltners believes that this bias may be inevitable. “You could change to another system tomorrow, but of course you’d want to retain and motivate the best people. So then the high performers would get more money anyway through bonuses and the like, and your system would get broken. I think the decisions companies make usually are manifestations of their culture and their beliefs, and sales compensation is deeply ingrained in those. It takes an unusually strong company to overcome the status quo.”

Rackham reluctantly agrees. “If you try to manage by compensation you’re probably not managing by management. The best system to me would be a bonus system where the incentive and focus came from the cul-ture and the management of the company. But I think we may have no choice but to have a high level of incentive compensation.”

54/20Rule

Making sense of customer value

Of course, not all sales efforts will depend on high-lev-el professional expertise. Enabled by online technolo-gies, the experts believe that more transactional sales will continue to migrate away from face-to-face selling. As the extremes of the spectrum grow farther apart, customer segmentation will become more critical, and more complex.

Rackham frames the divergence in terms of value: “If you look at customer value there will always be two components: the cost and the benefits. You can create benefits by increasing the expertise and the like that you give them. Or you can decrease the cost for the more transactional customer. The interesting thing is, customers are neither entirely one nor the other. It will depend on the opportunity.”

So will we see companies actually developing two or more different sales forces? He thinks so. “I’ve always disliked the hunter/farmer model. I don’t think that is going to predominate in the future. I agree that we need something more subtle than that. The evidence seems to show that the successful company has got to be able to use multiple models and target them appropriately.”

Structural change

Given all these issues and trends, what two things are most likely to change in the near future?

The hardest changes may be in the area of structure. How can companies segment their sales expertise in a way that is both efficient for the organization and meaningful for customers? Specialization gets very complicated, says Zoltners. “You’ve got big accounts, little accounts, U.S. accounts, and global ones. What-ever structure you begin with needs to be extensively customized, and flexible enough to adapt to changes.”

Technological revolution

The other major evolution will be technology. Zoltners believes that innovation in the ways sales people can touch customers, such as tele-presence technologies, social networks, data analytics, and outsourcing, are just getting started. “Even today, inside sales jobs are growing three times faster than outside sales thanks to technology,” adds Stevens. “According to Salesforce.com CEO Marc Benioff, inside sales people are getting higher close rates than traditional teams, in a third of the time and at a third of the cost.”

Importantly, many of these advantages work in both directions. Technology adds flexibility and conve-nience to the sales process for customers. And those who have a fairly clear idea of what they want can go and find it. Zoltners points to recent SSC research showing that before the first discussion with the sales person even happens, many customers have already made a first-stage decision.

The end of sales as we know it?

If these trends continue, what does the future look like for the sales person? Rackham predicts that the number of face-to-face sales people will fall, but the demands on them in terms of job complexity will rise. “That’s going to mean a different kind of person, a different skill set, and different kinds of autonomy, supported by an organizational structure that’s both more rational and more flexible.”

Regardless of what insights, skills, and resources the sales person of the future may need to bring to the ta-ble, Rackham is confident that personal interaction will continue to be a critical part of the process. “At the end of the day we’re still talking about human beings mak-ing important decisions. Sometimes buyers just need your reassurance that a particular product is going to fit their needs at a particular cost. Sales as we know it will not just go away. I think we’ll all still have jobs.”

Neil Rackham

There are millions of sales jobs around the world today, but a large number of those are disappearing every year. As technology advances and consumer demands increase, the idea of a salesperson as a “talking brochure” is no longer valid. World class sales forces understand this and are making every effort to adapt and maintain their positions of leadership in the marketplace. There is no greater authority than Neil Rackham on where the selling profession is headed and what individuals and organizations must do to distinguish themselves from their fierce competitors.

Having conducted the largest-ever study of professional selling – observing more than 35,000 sales calls in over 20 countries, at a cost of $40 million in today’s dollars – Neil presents objective, quantitative insights in a dynamic, interactive fashion that brings true learning to the audience. (The effectiveness of his teaching and training methods earned him the Instruc-tional Systems Association’s lifetime award for Innovation in Training and Instruction.)

Many of of the Fortune 100′s largest companies in the United States, including IBM, Xerox, AT&T and Citicorp, have engaged Neil Rackham as an advisor on sales performance. More than half the Fortune 500 train their salespeople using sales models derived from his research. As a sought-after conference speaker, Neil has shared the platform with notable leaders such as Tom Peters, General Colin Powell, Philip Kotler and many others. Using his signature combination of humor, passion and group interaction, he stimulates and challenges his audiences to reach new heights in the world of professional selling.

Howard P. Stevens

Howard Stevens is Chairman of Chally Group Worldwide. Mr. Stevens specializes in leadership develop-ment, succession planning, customer and market analysis, and sales benchmarking. He is the creator of the original sales product lifecycle classifications and designed the major 5-year longitudinal study of leadership development for the U.S. Department of Defense and NASA. A licensed clinical psychologist, he is also known for his research and programs to develop a professional sales curriculum at the university level. With diversified interests, he is the author of several books on sales and management (published in multiple languages) including Achieve Sales Excellence, The Quadrant Solution and Selling the Wheel. He has

written many articles and is a frequent speaker and radio and television guest. His World Class sales benchmarks program has been presented over 500 times across 30 countries for corporations, trade associations, government agencies, and universities. He has been a guest on CNN, Bloomberg USA, National Public Radio, Radio Free America, and other business-based programs. Mr. Stevens also taught “World Class Sales” benchmarks at the Columbia University Graduate School of Business and other univer-sities, and serves on the Sales Advisory Board for Ohio University and the Foundation Board of Wright State University.

Andy Zoltners

Andris A. Zoltners, Founder of ZS Associates, is a Frederic Esser Nemmers Distinguished Professor Emeri-tus of Marketing at the Kellogg School of Management at Northwestern University, where he had been a faculty member for more than 30 years. In 1983, Professor Zoltners and former Kellogg colleague, Prabha Sinha, founded ZS Associates. The success of ZS was recognized by their induction into the Chicago Entre-preneurship Hall of Fame in 2005.

Professor Zoltners’ areas of expertise are sales force strategy; sales force size, structure and deployment; sales force compensation; and sales force effectiveness. He has personally consulted for over 100 com-

panies in over 20 countries. In addition to his consulting, he has spoken at numerous conferences and has taught sales force topics to several thousand Executive, M.B.A. and Ph.D. students. He has published more than 40 academic articles, edited two books on Marketing Models and has co-authored a series of books on sales force management.

Prior to joining the faculty at Kellogg, Professor Zoltners was a member of the Business School Faculty at the University of Massachusetts. He received his Ph.D. from Carnegie-Mellon University.

© Copyright Chally Group Worldwide

www.chally.com 800.254.5995 3123 Research Blvd Dayton, OH 45420

TALENT ANALY TICS

Version-1104-13