26th November 2021 | Journal Of Sales Transformation
Dr Frank Cespedes, senior lecturer, Harvard Business School; Professor Mark Johnston, Professor of Marketing and Ethics, Rollins College; Professor Nick Lee, Warwick Business School; Dr Colin Mackenzie, specialist lecturer, Edinburgh Napier University; Dr Javier Marcos, Associate Professor, Strategic Sales Management and Negotiation, Cranfield School of Management; Dr Beth Rogers, Visiting Fellow, Cranfield School of Management
Q: What will be the top-three agenda items for sales leaders as businesses emerge from the pandemic?
FC: 1) Customer Selection and Prioritizing Sales Focus. The pandemic was not an equal-opportunity plague. It damaged (and continues to damage) some sectors much more than others. An important issue in accelerating growth will be focusing sales efforts on those sectors (verticals, type of customer, and so on) where buying is more likely to happen. In turn, this means reviewing, refining, and often substantially revising segmentation criteria.
2) Managing multiple channels. The pandemic accelerated omnichannel buying. For most firms, the choice between in-person and online is not either/or: they are complements and the role of channel partners in dealing with multi-channel selling requirements is growing. But this means for many firms a significant change in the scope of sales leaders’ responsibilities.
3) Pricing. The supply-chain shocks created by the pandemic have raised input costs and provided a core rationale for price increases in many industries. But sales leaders should also see this as both an opportunity and requirement for a) revisiting and making sure they are articulating the value proposition as it relates to customers today, not yesterday; b) also making sure that their salespeople can do this in framing value and price with the right people at their target accounts.
MJ: 1) Staffing challenges. Many companies are facing critical personnel shortages including in sales. 2) Redefined customer relationships. The pandemic radically altered established customer relationships. Salespeople need to learn how to manage customer relationships in new ways using technology. 3) Supply-chain shortages. Supply chains have been severely disrupted for a variety of reasons. This has created a great deal of pressure to maintain existing customer relationships while hitting sales targets.
NL: 1) Gaining a feel for how persistent are the changes that have been caused by the pandemic. Is this a “new normal”, or will things return to broadly how they were pre-pandemic? And if so, how quickly? 2) Making certain that salespeople are “ok”. Do they need support to get back to their regular tasks? Are they struggling, for example, to go back to face-to-face contact? 3) Is remote working (including customer interaction) actually adding value, and in what way?
CM: 1) Credit and affordability. It would be reasonable to expect pressure to continue on margins; customers may not be willing to pay more, but business, having increased costs will have to persuade customers that they still represent value. What needs to be taken into the mix is whether or not customers can now be afforded the credit they once had as many will have used their reserves. Sales volume versus risk is not often a focus of salespeople but suppliers need to reappraise their customers.
Can AI replace salespeople? Not in many cases, but it can help make all salespeople and sales leaders more effective.
2) Finding new customers. Many businesses will find that a proportion of their customers will have evaporated and it may take time, research and hard work to replace them. This will be harder as the usual, face-to-face meeting opportunities such as conferences and coffees may be more limited.
3) Managing remote sales teams. As someone who still caught Covid, despite two vaccinations, and then had to isolate, it may be longer than we think before normal working can be resumed. It is likely that it may be safer, or perhaps the only option, to have some staff members working remotely. Managing people at a distance is not as easy without the “office small talk” that is often important in developing internal relationships. Leader-member-exchange (LMX) theory of leadership has a volume of supportive research that talks about “in-groups” and “out-groups”. Effective working relationships are about maintaining people in the “in-group”. It goes without saying it is harder to do this remotely. Effective salespeople are hard to find, so if they feel they are in the “out group”, they may be tempted to jump ship.
JM: Three agenda items all starting with T…. 1) Technology. New ways of working have emerged as a result of the pandemic. Likewise, customers have started to consider and be comfortable with new forms of engagement with their suppliers. Underpinning these are digital technologies. Therefore, sales leaders will have to develop compelling technology roadmaps to equip their teams and organisations for new ways of selling and relating to customers. 2) Talent. The “war for talent” will increase as a result of the pandemic. Jobs have been destroyed, resulting in people migrating from one sector to another. 3) Transformation. Customers’ expectations have shifted, meaning that there is a growing need for adapting methods and practices, and even mindsets to the new realities.
BR: In some ways, the pandemic hangover has been over-shadowed by supply-chain issues. So where we are now, I think the issues are: 1) Working with key accounts to manage shortages and price increases; 2) Balancing sales resources – as pre-pandemic field selling switches to post-pandemic inside sales; 3) Working out where the next few pockets of growth are coming from (as they may be few and far between).
Q: Are these the same three agenda items that appear every year?
FC: These items are perennially important issues for sales leaders, but accelerating growth after the pandemic moves them up on the priority list for sales leaders.
MJ: No, these are challenges created by the pandemic.
NL: No, there are pressing needs which sales managers need to take account of that are unique to moving through this immediate post-pandemic phase.
CM: You could argue that the themes of margin, finding new customers, and managing people are normal sales practice; however, the pandemic has brought these three topics into sharper focus. Sales managers may have to find innovative solutions and work just that bit harder. Often in sales the 80/20 rules apply – 80% of sales come from 20% of customers – but what if the customers that have fallen off the shelf are in the 20%? So, whilst the themes of credit and creating a value proposition, researching new business and managing remote employees may not be new, they are areas that need to be specifically re-addressed for sales organisations to be at the top of their game.
JM: Technology has been a constant priority and concern for senior leaders for some years now. The scarcity of talent and the required acceleration in transformation are relatively new phenomena.
BR: No! We are in scary new territory as 2022 begins.
We are in scary new territory as 2022 begins.
Q: If so, what are the top-three new agenda items that sales leaders will be thinking about for 2022?
MJ: The ones mentioned above will the primary items sales leaders face in 2022.
NL: The answer to this depends on how persistent the issues caused by the pandemic are. However, in general as sales leaders start to navigate a broadly “normal” environment, I would say their attention would turn towards how to harness the many technological advances that have been hastened by the pandemic. For example, how can we leverage AI, video calls, and other tech to supplement a sales process that is starting to move back towards some level of face-to-face contact.
CM: Sales leaders should think about repositioning or redefining their value proposition. It’s not “business as usual”. They may find their customers have diversified, so they may have to change to match the post-pandemic business needs. It would do no harm for business to closely review their marketing strategy to check that it still aligns with their updated sales strategy – that’s assuming that since the pandemic they have updated/reviewed their sales strategy and not just been fire-fighting.
Business should be focussing on profitability, viability and reliability: in other words, looking at their own cost of sales, and how profitable each customer is to service. Whether the client/customer is viable in terms of credit, perhaps extending credit appropriately and with some protection, and looking at the reliability of their own supply-chain.
JM: For 2022, another new agenda item is the volatility in the marketplace driven by the shortages in commodities, raw materials (eg Silicon) and energy prices.
BR: As above – we are nearly in 2022
Q: How persistent will changes such as hybrid working be for sales organisations post-pandemic?
MJ: It is clear the nature of the hybrid work environment has dramatically impacted sales organizations and the customer relationship. While there will eventually be a return to more traditional work environments, the shift toward hybrid workspaces is permanent. Indeed, this trend had started before the pandemic but was accelerated as a result of health concerns.
NL: Probably less than people thought. There is a reason that firms have been organized as they were (ie physical proximity), and it is not completely inertia and “this is how it always was”. There are advantages to being in physical co-location with employees, and also for organizations to be co-located. These advantages have not disappeared. So, in the end, the key task is to maintain any positive effects of pandemic working habits, but not lose the benefits of physical location.
CM: There is a push by many companies to get people back into the office. However, this may be resisted in certain areas, where employees realise that it is preferable to work with a quiet dog in the background, rather than crush onto a commuter train for a long sticky journey into town. Pre-pandemic there was a move to home-working; this shift has been accelerated, with many now choosing to live and work in the country.
However, the loss of communication probably hurts companies in ways we just don’t think about. One business lady told me that, in their office, everyone used to listen to all the business conversations and matters were less likely to be lost. No matter how good your CRM is, not everything said is written down or noted. If team camaraderie becomes unglued, then staff retention could also be a hazard. People don’t work for money; they want and need more, and a feeling of belonging is harder to foster when working remotely.
Business needs to recognise that the tension can also be with the individual, some wanting to work in a group but for obvious reasons are suffering anguish. Mental health problems are real, and business needs to adjust its working environment to support employees especially during these unusual times.
There should be clear conversation and friendly communication between organisations wanting people back into the office and those employees resistant to the old status-quo. It is unlikely that train companies will offer part-time season tickets for hybrid commuters.
JM: There is consensus that new forms of work that became the norm during the pandemic will continue after the pandemic. There are two main reasons for this: financially, remote working is advantageous for a number of companies; secondly, employees are increasingly demanding flexible work arrangements with a preference to spend part of the working week working from home.
BR: It will persist. Customers want more self-service or quick online interactions for more categories of purchase. Also, there is a cost-advantage with at-home working – less travel, and so on.
Q: How are supply-chain issues affecting sales organisations?
MJ: Supply chain issues are having a significant impact on sales organisations, and this will continue into 2022. There are shortages in major components like computer chips that will continue to impact the ability of companies to deliver products to customers on time and at quoted prices.
CM: Sales forecasting has never been an exact science. In some cases, it is production-led; in some cases, customer-led. However, when you have uncertain supply-chain issues, whether it is a shortage of HGV drivers or essential components, this causes more complications for everyone involved in sales. It doesn’t just impact on sales output but also on how you maintain trust and relationships with your customers. It put stress on sales organisations to maintain or improve their external communication.
Many business that I know are having to reappraise their stock levels and their own supply chains. In some cases, they are looking to find local suppliers to minimise interruption. This offers an opportunity for salespeople to target customers closer to home. Where there are problems, there are opportunities.
JM: Significantly. To start with, the cost base of many manufacturers has dramatically increased. Therefore, if they wish to maintain margins, and are unable to achieve efficiency gains, they will have to translate to the market the increased costs via higher prices. This will, on a number of occasions, result in lost revenues. Second, the uncertainty of supply will mean account managers and salespeople won’t be able to fulfil customer orders, therefore failing to deliver on “promises” made. Lastly, security of supply will become a premium feature of manufacturers’ value propositions.
BR: It seems inevitable that the operations side of the business will have to switch back to some local sourcing, which will have price implications. Sales professionals will have to manage the messaging to customers. Value co-creation might be focused on doing more with less, eg de-engineering products.
Salesperson welfare has never been more important. The health and welfare of the salesforce is critical for the long-term success of the company. In the current environment the salesperson’s welfare is a top priority.
Q: What are the top-three technology trends that will be on sales leaders’ agendas for 2023?
JM: 1) Artificial intelligence and machine learning, enabling smarter and more efficient processing of structured and unstructured data. 2) Virtualization – both augmented reality and virtual reality will provide new ways to present, unengaged with customers. 3) Advanced systems, enabling the capture of customer interactions (both written and verbal) in real time.
BR: 1) Which is the best online platform for encouraging creativity in meetings with colleagues and customers, or what can be done with existing platforms? 2) Can the Internet of Things provide analytics to identify new sales potential? 3) Can some kind of AI (eg analytics-driven chatbots) enable self-service and/or engagement with customers online?
Q: What’s the current situation with respect to AI in sales?
FC: AI is a very elastic term, and that’s a problem: sales leaders must first clarify what is meant here if they are to make use of new technologies, increased data, and better communication tools. But if by “AI”, we basically mean more/faster/deeper data analytics, then I see the following as the places where AI is most likely to have a significant impact on sales leadership and sales organization in the next few years….
Increasing selling time. The data vary by industry and company, but most salespeople spend the bulk of their time on non-selling activities and much less than 50% of their time interacting with customers. AI analytics – informed by managerial know-how – can blend virtual and traditional sales processes to increase selling time in many organizations. Think about the impact in a business if smart use of digital tools can offload other activities and increase selling time by an incremental 10-20%. In most businesses, that represents a very significant gain. Further, when improvements lower the total cost of selling activities, prospects that were not profitable enough to target become worth it, increasing the addressable market.
Monitoring online/offline interactions. As a multi-channel combination of online and personal selling becomes the norm in sales models, digital tools become important in measuring and evaluating where, when, and how to deploy online and offline efforts. New analytical tools can shed light on what does and does not spur initial adoption, the features that retain customers, and the offers that are more and less likely to be effective. These tools are also important for understanding where in-person selling efforts have the biggest impact and where they are not necessary.
NL: There is a huge explosion now in the potential of AI to help in sales coaching in real time, as well as in other areas. The key is to use AI to do things it is suited to, but not for things that it is not good for. AI is not a cure-all or silver bullet, and the best firms will supplement AI with human resource (and vice versa), not “throw AI at anything”, and expect it to work effectively. The pandemic has helped AI develop in this sense, because the massive growth of digital interactions has led to massive data increases, which helps AI develop. Can AI replace salespeople? Not in many cases, but it can help make all salespeople and sales leaders more effective.
JM: In B2C, it has seen an explosion; in B2B, a wide range applications are still in their infancy.
Q: What are the key talent issues for sales leaders post-pandemic: recruitment, development, retention?
MJ: The are several significant talent challenges facing sales leaders post-pandemic. First, simply finding qualified (in some cases even unqualified) candidates is proving to be a challenge. Second, job candidates have many opportunities (a seller’s market) which is driving up the cost of hiring qualified candidates. Finally, many candidates may lack essential skills (for example specific product knowledge) and require additional training.
CM: Recent research (Mackenzie & Bauer, iJoST, 7.4 2021) identified that many sales managers and salespeople do not feel valued. Development of salespeople is often haphazard and without regular review. Sales leaders should consider the provision of organised continuous professional development of their sale managers and team. Sales is a combination of knowledge, skills and attitude, and these can all be “brushed-up” to impact positively on the bottom line.
If your team members are not willing to develop, then you have to ask yourself whether you have the right people in place. It always amazes me how many sales managers are promoted because they are the last person standing, not because they can manage. Development of sales managers is not simply about putting them on a management course; it’s about developing their thinking, their ability to mentor, to coach and support others in developing essential skills.
In essence it is important to recruit people who want to improve, rather than have basic skills. It is important to develop people for themselves and for the business and, if you want retention, give them a reason to stay.
JM: The main issues as I see them are: 1) High levels of turnover, with all the associated costs. For instance, in the US it is estimated that 27% turnover exists in many industries. 2) The skill sets for sustained performance in sales have changed in such a way that educational institutions will take time to catch up and create the needed human capital. 3) To fill sales jobs.
BR: Re-thinking the resourcing model – use of third parties, employees working from home, technical skill sets for key account managers.
Q: Have you noticed a change in the skill sets required for salespeople, since the onset of the pandemic?
CM: My business contacts tell me how much harder they have to work to get to see the right people. My son owns a specialist retail business, and he is doing well, but he has had to improve the verbal telephone skills of his people and offer new services to cope with distance selling. My daughter owns a recruitment company, and she says the skills set that her salespeople have had to manage is managing working from home. I also teach sales, and students have had to learn how to sell using video conferencing, beset that it is with technical problems. Learning how to present yourself via video needs some thought around positioning, background and trying hard to work out body language and eye contact. How long will it be before we are comfortable shaking hands again?
JM: Yes resilience, ability to work in virtual environments, systematic preparation of customer interactions have brought about significant changes in how we sell.
BR: Online sales activity requires much more homework and planning – the time with the customer has to be tightly structured.
Q: What are the key skills for a) salespeople and b) sales leaders going forward?
FC: a) Salespeople. Online media make product and price comparisons a click or two away in most markets, and access to decision-makers is getting harder and more time constrained. The days of salespeople as, primarily, human versions of product literature are fast disappearing, because customers often have this information, in detail, before they meet with reps. Hence, there is more necessity for reps to add value when they do interact with prospects and customers. Similarly, sales tasks in more industries are becoming more data-intensive, because the customer has more data. This is a significant training issue.
b) Sales leaders. Technologies and the data revolution in organizations are increasing the cross-functional interactions required of sales leaders, and especially with their colleagues in finance who now get more granular data about sales activities (as well as revenue outcomes) and ask sales leaders questions about those activities. Both financial-literacy requirements and business acumen are increasingly important competencies for someone seeking to build a career in sales management.
MJ: There are three essential skills for salespeople going forward. First, salespeople need to understand the customers’ business using technology to educate themselves and their customers. Second, as always, salespeople must be able to communicate the value proposition clearly and succinctly to the customer. As technology replaces face-to-face meetings, the communication skills of the salesperson must evolve. Finally, the salesperson must be able to manage customer expectations given the current challenges in the supply chain. For sales leaders, the world has changed, and they must learn to manage in an environment with personnel challenges, supply-chain shortages, demanding customers and shrinking margins.
NL: I don’t see any differences here post-pandemic, and, the core skills (from my perspective) are broadly similar, because to me the most important skills are better thought of as “meta skills”: things like learning ability, flexibility, comfort with change, and the like. Obviously, I think sales leaders probably need a strong emphasis on empathy and softer skills at the moment, and recognition of unique circumstances and challenges that their employees have faced, and may continue to do so.
CM: The key skills essentially don’t change over the years: those of listening, understanding needs, building trust. However, those key skills have never been more important than now. Sales leaders need a high level of strategic thinking and also to develop a strong, authentic ethical compass to prevent reputational mishaps derailing sales growth. The key to all of this is communication – internal and external. Dumping information in emails doesn’t do it for me; sales leaders need to be more inventive and original to not just get their message out to customers but also to their teams.
JM: For salespeople the required skill sets are a combination of four dimensions: business acumen, cognitive abilities, relational competence, and functional expertise. For sales leaders, they will have to develop new approaches to managing performance, and the same if not a higher degree of adaptability than their sales forces.
BR: a) Salespeople. As ever, in-depth customer knowledge and the application of company capabilities to help customers succeed. That doesn’t change; what has changed is that has to be done over a different medium. Given the supply-chain shortages, co-creation of value switches to doing more with less product (eg in category management) or de-engineering.
b) Sales leaders. The challenge of applying resources to opportunity will be different, so sales leaders need to be open-minded and may have to research new ways of doing things. Remote management, which was always there to some degree, has become the norm. Engagement with staff will become more focused, with less opportunities for informal discussions and social events.
Q: How much of a priority is salespeople’s welfare?
MJ: Salesperson welfare has never been more important. The health and welfare of the salesforce is critical for the long-term success of the company. In the current environment the salesperson’s welfare is a top priority.
NL: Obviously, it SHOULD be the most important priority.
CM: Anyone responsible for a team needs to have them as a priority. Sales leaders should always be thinking: “What’s it like for the team member? Will this action make them feel valued and supported?” As comedian Billy Connelly once said, “If you walk a hundred miles in someone’s shoes, then you’ve probably got away with stealing their shoes.” By all means try walking in their shoes, but remember it’s ethical to return them.
JM: Crucial – particularly given that younger generations place a strong emphasis on wellbeing and work-life balance.
BR: Much more so than pre-pandemic. Business leaders have focused on teamwork, motivation and engagement, and showing empathy to employees.