Over the next few years, self-service options will radically change your sales force and the way you do business with customers. Some customers will simply not value — and refuse to pay for — a distributor's outside sales force. This conclusion comes from our findings in the new “Facing the Forces of Change: The Road to Opportunity” report, published by the National Association of Wholesaler-Distributors (NAW), Washington, D.C.
Distributors no longer have a lock on information needed by customers to make purchasing and sourcing decisions because manufacturers and online sources will increasingly make such information readily available. As a result, the sales force's perceived value in educating customers about new products and in-use applications will erode significantly.
Distributors will be forced to respond as customers take a more active role in the presale and transaction portions of the buying process. This article reviews the trend toward self-service, explains the coming changes for the sales force, and suggests sales planning strategies for distributors.
Customers will embrace self-service options. The Internet changes the definition of self-service. Online ordering is just one aspect of a far-reaching shift by customers from “do it for me” to “do it yourself.” Your customers are trying to do more in less time.
Customers gravitate toward self-service when they can perform activities that bring added value or benefits, such as becoming better informed about product options online regardless of their distributors' line card. If customers perceive that distributors do not provide enough service or information to justify a margin, they will conclude they can do a better job themselves.
Keep in mind that your customers are being trained in self-service through their experiences as American consumers. Consider just three examples:
More than 90 percent of gasoline purchases for personal autos are made at self-serve stations.
There are 352,000 banking ATMs in the United States — four times the number in 1993.
One-third of all supermarkets now offer self-scan checkout.
According to our new Facing the Forces of Change: The Road to Opportunity study, customers will accept more responsibility for performing many activities they previously expected distributors to handle. Customers will increasingly want to communicate with a sales rep via e-mail, gather online product information and specifications, obtain product prices and availability information online, access post-sales technical support information online and review their purchasing history online.
Self-service will drive sales-force transformation. The customer self-service trend will significantly erode the value of the wholesale distribution sales force in educating customers about new products. Consider the following sales-force implications of the self-service trend:
Technology has made customers more knowledgeable and comfortable doing business quickly. More and more customers will expect “real-time service” from the salespeople who assist them.
Customers will have access to increasingly comprehensive online information for locating and comparing prices, costs and sources of products. More than half of distributors expect the Internet to be the most common way that customers find new sources of supply.
Online technologies give customers lower cost and higher service alternatives to a distributor's sales force. Customers and purchasing managers will increasingly use the Internet to bypass the sales force and directly gather product specifications, warranty and rebate information, material safety data sheets and information on potential suppliers.
Growth in technology-enabled self-service will remove the easy calls from a call center, requiring fewer inside sales reps and requiring the remaining employees to be more problem solvers than document readers.
Our research found many executives to be deeply uncertain about the future of their sales force. Nearly one-third were uncertain if their own sales force will remain relevant to customers as a source of product information. The level of uncertainty has doubled since our 2001 edition of Facing the Forces of Change. In some cases, we found that customers are already limiting calls from the outside distribution sales force.
But the sales force will evolve, not vanish. Although roles and value will change, little evidence exists to suggest the complete elimination of distributors as important contributors to selling channels.
However, the following trends will change your sales force in the future.
Consulting. The value of a distributor's sales force will revolve around consultative roles that involve understanding and addressing customers' needs. There will be less need for order taking, answering basic questions or providing readily available product knowledge. Salespeople will need to provide more value than merely understanding the peculiarities of the pricing structure.
Sales-force automation. Distributors of all sizes plan to introduce sales force automation technologies by 2008. At least half of mid-sized and large distributors are already using customer relationship management (CRM) software products.
Inside sales. Inside salespeople will have more account management responsibilities as customers take a more active role in the buying process. Examples of these responsibilities include soliciting orders from new and existing customers, suggesting complementary products or services, solving problems, handling complaints and becoming the primary point of contact between a distributor and the customer.
Like your customers, salespeople will not use any technology that's too complicated or does not provide real value. Think about the sales force as the “internal customer” that will adopt a new technology only if it helps them do their job better. If the technology does not help them sell more effectively, then the system is to blame, not the salesperson.
Train your sales force for tomorrow's challenges. Distributor salespeople accustomed to selling on price will need training to compete in the evolving world. Evaluate each of your salespeople to determine if he or she needs training in qualifying customers, uncovering problems, identifying solutions or bringing the company's resources together for problem solving. Be sure to include inside salespeople when developing training plans to reflect growing account management responsibilities.
The new Facing the Forces of Change: The Road to Opportunity study provides detailed results by industry and company size to help benchmark your own company's plans against the plans of other distributors.
Make sure your company's core operating philosophy will continue to effectively serve customer needs in the future. What do your customers want your sales force to be doing? As customers change how they buy and run their business, your sales compensation plan must keep pace. The current and future customer behaviors discussed in Facing the Forces of Change: The Road to Opportunity suggest a move away from deal making toward greater emphasis on keeping the customer satisfied. In response, compensation plans must focus on customer needs, not on the features and benefits of products or services.
Distributors must start adopting compensation plans based on a customer-focused strategy — not history. If your compensation plan is based purely on sales volume, the sales force will focus almost exclusively on finding the volume to support commissions. Salespeople will be unlikely to invest time in longer-term goals like nurturing a prospect with the hopes of someday converting him/her into a customer.
Inside sales remain an untapped source of new revenue for most distributors. All selling interactions with customers provide upselling and cross-selling opportunities. New technologies can provide inside sales or customer service reps with targeted product recommendations and guided selling scripts.
An upsell/cross-sell campaign is doomed to failure if your call center reps are still measured on call times. Call times go up when attempting to cross-sell, requiring new metrics and measurements to reflect new customer-focused revenue objectives.
By adopting these sales planning strategies, your company can successfully counter the impact of customer self-service and seek out the new paths to profitability outlined in Facing the Forces of Change: The Road to Opportunity.
Adam J. Fein, Ph.D. is the founder and president of Pembroke Consulting, a firm that helps senior executives at wholesale distribution, manufacturing and B2B technology companies build and sustain market leadership. He can be reached at (215) 523-5700 or via the Web at www.PembrokeConsulting.com. This article is adapted from Facing the Forces of Change: The Road to Opportunity, which is available at www.nawpubs.org.
SALESPERSON SKILL SET
Here are five specific new traits salespeople will need to meet the wholesale-distribution industry's evolution.
Salespeople will need to willingly accept change and work at building new behaviors into their routine in response to the strategic direction of the company. This can be a major cultural shift at distributors whose salespeople view themselves as independent businesspeople operating by their own rules.
Salespeople must be well trained in a distributor's IT systems and have real-time access to all the information the customer is going to demand. The sales force must be comfortable selling with new technology and be able to teach customers how to gain information or place an order. Sales representatives will need to encourage customers to access the distributor's Web site for product information and marketing promotions.
Concentration on Service
The salesperson may need to act more like an extension of the customer's business rather than an arm's length vendor selling simple products on a price-and-availability basis. As your service offering increases, your sales force will need to educate your customers on the best array of value-added services.
Salespeople will need to receive training focused on improving selling and service skills. Our research found that salespeople are expected to spend seven more days per year in training. Product-oriented training does not help the sales force develop the new consultative skills needed for success. Consider augmenting classroom training with online refresher courses on specific sales tactics.
Not all current and prospective customers justify or deserve the identical level of sales support. Salespeople need solid data on the highest-opportunity prospects to get the maximum return on their time. Identifying the top 5 percent of your current customer base based on revenues or profits sounds simple. Technology may even make it easy to gather this information. Yet, accurately predicting which customers will make up 10 percent of revenues or profits in three years — the ones you want to focus on today — is far more challenging. And if the sales force will be spending less time with existing accounts, they will need information to correctly target the best opportunities.